Bitcoins’ appeal as an alternative store of value asset is increasingly gaining ground, as per analysts at German’s investment bank Deutsche Bank.
“There seems to be an increasing demand to use BTC where gold used to be used to hedge dollar risk, inflation, and other things,” Jim Reid, MD and head of global fundamental credit strategy, said, according to ZeroHedge.
BTC has long been considered by supporters as digital gold because of its limited, predictable supply and use case as a store of value outside banking influence.
Whereas BTC has gained 144% in 2020, gold is up 22%. Both assets appear to have benefited from the inflation-boosting monetary and financial policies introduced by central banks and governments around the world to contain the economic fallout from the COVID-19 crisis.
Bitcoin has rallied more than 25 percent this November along despite hopes for a quick worldwide economic recovery on potential coronavirus vaccines and enhanced risk appetite in stock markets. However, gold has lived up to its reputation as a haven asset by dropping 1% thus far this month.
The separation between gold and silver on one side, and BTC on the other, is one of the strange things of November, as per Reid. United States-based drug manufacturers Pfizer (PFE) and Moderna (MRNA) announced encouraging results for their experimental COVID-19 vaccines earlier this November, triggering a rotation of funds out of gold and other haven assets and into risk assets.
Reid said earlier this month that COVID-19 vaccines are equivalent to worldwide fiscal stimulus. Christian Nolting, global chief investment officer at Deutsche Bank Wealth Management, claimed inflation could somehow increase in the next 2 years, boding well for gold and stocks.
As of the time of writing, BTC was trading around $17,550, while gold was exchanging at $1,860 per ounce.