Bitcoin has been often compared to gold as the king coin entails several properties that mirror that of gold. The store of value aspect, limited supply of 21 million, and several other characteristics have led to a great majority of people touting Bitcoin as digital gold. While many believe that BTC could flip gold, the entire, gold vs BTC narrative has been on for quite a while. Just as the value of the largest cryptocurrency has been surging, an array of people have been steering towards Bitcoin.
The asset recently got an endorsement from SpaceX CEO Elon Musk. Now, CME Group’s Managing Director and chief economist, Bluford Putnam revealed his take on the king coin.
Bitcoin vs Gold Narrative Prolongs
Gold has been an investor’s favorite for the longest time. Bitcoin seems to be taking over that as millennials and Gen Z has been opting for BTC over gold. Speaking about the same, Putnam told Bloomberg that Bitcoin was emerging as a competitor against gold.
Putnam pointed out that the supply of gold is hazy while Bitcoin’s limited supply of 21 million was quite clear and steady. Albeit this, he urged people to be aware of the volatile nature of crypto. CME’s Chief Economist said,
“When the supply is relatively inelastic, then the dynamics of shifting patterns with demand can have very large and abrupt impacts on prices. Bitcoin has illustrated this point.”
He suggested that BTC was on its way to replace gold as a hedge against inflation. While gold has time and stood as a strong hedge during times of unrest in the past. Putnam, however, suggested that the metal may be slipping in terms of its appeal as a hedge, especially against global political risks. He added,
“In the 2017 to 2020 period, the mostly ups and occasional downs of the gold price appear to be directly tied to Fed policy shifts more than anything else. Since equities were responding to the same driving force, the gold-equity relationship tended to become a little more closely associated, weakening gold’s safe-haven appeal.”