The so-called ‘digital gold‘ accumulates a rise close to 60% in the year and drives cryptocurrencies such as Bitcoin and Ethereum.
They say that uncertainty is a bad advisor, and more so in investment matters. The lack of knowledge about how the health crisis will evolve and, consequently, the economic crisis, is leading investors to seek investment alternatives compared to traditional assets at a time when markets are still unable to fully recover.
Among these alternatives, values such as gold or bitcoin emerge, which experience strong price increases in the year, of 26% and 60%, respectively. Both have overcome relevant psychological barriers, one of 2,000 dollars per ounce in the case of gold and that of 10,000 dollars in the case of bitcoin. The differences between the two assets are notable, but do they share the status of a safe haven?
The longer bitcoin can demonstrate its attractiveness as a safe haven and digital gold, the more difficult it will be for institutional investors to explain why they are not adding it to their portfolios. It’s absolutely incredible to see how much the [bitcoin] market has already matured in about a decade, considering “how young it is.”
However, equating bitcoin to gold makes no sense, since no one, except some evangelized ideologues, invests in cryptocurrencies to protect their assets, if not to assume a risk with a potentially very attractive reward, which says nothing bad about bitcoin. However, trying to sell the idea of bitcoin as a safe haven or store of value today, it does.
Whether it resembles gold or not, the truth is that the pandemic has provided a boost for this digital currency given the general uncertainty that has marked the rhythm of the second quarter of the year and that will continue during the second half.
This is demonstrated by the figures. The cryptocurrency is currently around $ 16,000, after rising almost 60% in the year and 20% since the beginning of the pandemic, in the same line as gold, considered the safe haven value par excellence, which it rises 26% in 2020 and 20% since the coronavirus began to affect the daily lives of Western countries.
Short-Term Correction
If the minimum zone of $ 10,000 is not lost, the logical thing would be to continue consolidating and finally attempt the attack at $ 16,000. At the moment, the cryptocurrency is gradually approaching this threshold and already it managed to touch the 15,900 dollars with its fingers.
Future price variations will depend, to a large extent, on how the fight against Covid-19 progresses and how the economy as a whole is affected, because although the measures taken by governments, the medium-term impact of these measures is not yet clear.
What Is and Who Is Behind Bitcoins
Although bitcoins have been in the eye for some years now, there is a lot of misinformation about this cryptocurrency. The definition of bitcoins is somewhat fuzzy. These are virtual currencies that, unlike the dollar or the euro, do not belong to any territory or government. Its framework of action is situated in the digital world, in which the asset purchase and sale operations are carried out through the mobile device or an online account. However, and since no entity or government has the power to take measures regarding its circulation, its value depends on the users themselves. They defend themselves, where to buy bitcoin where to sell bitcoin, how they can trade it, etc. Thus, its worldwide demand will mark the value of the currency.
Many governments and authorities have been reluctant to use this currency, which, according to some, can lead to fraudulent operations. However, cryptocurrencies work in a similar way to a debit or credit card, there are more and more establishments in the world that allow payment through this currency. Therefore, any operation that is carried out is registered and can be traced.
Featured image: QuoteInspector
