Bitcoin vs. Gold: Why Experts Think BTC Will Lag Behind

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Bitcoin vs. Gold: Why Experts Think BTC Will Lag Behind

Highlights

  • Bitcoin vs Gold: Bitcoin's volatility hampers its potential as a hedge.
  • Bitcoin's institutional adoption lags, hindering its global hedge acceptance.
  • Historical underperformance signals Bitcoin’s accumulation phase, awaiting future rebound.

Bitcoin price continues to fluctuate, with the digital asset seeing a modest decline of 0.78% over the past 24 hours.  Meanwhile, Gold is trading at $4,865, down by 2.58%. While Bitcoin’s appeal as a potential hedge is frequently discussed. However, analysts, including the famous Willy Woo, opine that it could take 20 years before it can really challenge the long-term leadership of gold.

Bitcoin vs. Gold: Why Experts Think BTC Will Lag Behind

Willy Woo, a prominent Bitcoin advocate, sparked renewed debate over Bitcoin’s role in global markets. According to him, despite its structural benefits, Bitcoin is still miles behind gold in terms of being a safe hedge. 

According to Woo, Bitcoin remains a risk asset and is thus prone to fluctuations in the market, unlike gold, which is generally perceived as a stable store of value during times of uncertainty.

The volatility of Bitcoin is more attractive to short-term traders, but Woo pointed out that the future of Bitcoin as a long-term instrument is still to be developed. Woo believes that the position of Bitcoin as a macro hedge will only be adopted after a slow change in the market, and this may require between 15 to 20 years. 

Similar to how Woo explained, Bitcoin is required to first break as gold, and only after that, it can start fulfilling its purpose as the better asset of safeguarding wealth.

Factors Holding Bitcoin Back

One key reason for Bitcoin’s delay in becoming a global hedge is its limited adoption in institutional and governmental circles. Bitcoin is still considered a new asset by many unlike gold, which has been trusted over centuries.

 According to Woo, the market psychology of Bitcoin is one that requires time to develop. Although Bitcoin has many advantages, like the ability to transfer money much easier and a reduced possibility of theft in comparison to standard gold, volatility is an important obstacle.

Similar concerns have been echoed by another popular investor, Robert Kiyosaki. He has been warning of a possible market crash and instructed his followers to hoard hard currency such as gold, silver, and Bitcoin. 

Kiyosaki proposes the idea of the economic collapse favoring people possessing physical and digital riches, but also warns that the shift to the use of Bitcoin as a stable hedge would require some time.

A Historic Streak: Bitcoin vs. Gold Struggles

Bitcoin’s performance relative to gold has been poor over the past year. For the first time in history, the BTC vs. Gold ratio has fallen with currency break of its 11 year generational bottom, indicating weakness.

Bitcoin has also recorded seven months of consecutive red monthly candles against gold, the longest streak of losses in the history of the pairing. 

This rate of continued underperformance is not normal and indicates that investors are shifting towards gold as a safer investment in a world full of uncertainty.

These indicators might be a sign of weakness to Bitcoin, but they might also be a sign that in the next few years, Bitcoin can experience a strong reversal. Traditionally, these phases of severe underperformance have been succeeded by severe market rebounds. 

The current trend of Bitcoin can actually lead to an accumulation phase, where long-term investors get ready to enter the next bullish period.

The future of Bitcoin as a possible hedge is unclear as market factors change. The coming events will possibly impact the price of both Bitcoin and gold, including the release of the February 18 FOMC Minutes, the US GDP and PCE Data on February 20, and the March 1 deadline on the CLARITY Act compromise. Investors are closely watching these crypto events, hoping for clearer regulatory guidelines and economic stability that could shape Bitcoin’s role as a hedge in the coming years.

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Frequently Asked Questions (FAQs)

1. Can Bitcoin replace gold as a hedge against inflation?

Experts suggest that Bitcoin's volatility and limited institutional adoption make it less effective than gold in the short term, but it may evolve into a hedge over the next 15-20 years.

2. Why is Bitcoin considered more volatile than gold?

Bitcoin's price fluctuates more rapidly due to its smaller market size and speculative trading. Gold, on the other hand, has a more established and stable market.
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Why Trust CoinGape

CoinGape has covered the cryptocurrency industry since 2017, aiming to provide informative insights Read more…to our readers. Our journal analysts bring years of experience in market analysis and blockchain technology to ensure factual accuracy and balanced reporting. By following our Editorial Policy, our writers verify every source, fact-check each story, rely on reputable sources, and attribute quotes and media correctly. We also follow a rigorous Review Methodology when evaluating exchanges and tools. From emerging blockchain projects and coin launches to industry events and technical developments, we cover all facets of the digital asset space with unwavering commitment to timely, relevant information.

About Author
About Author
CoinGape comprises an experienced team of native content writers and editors working round the clock to cover news globally and present news as a fact rather than an opinion. CoinGape writers and reporters contributed to this article.
Investment disclaimer: The content reflects the author’s personal views and current market conditions. Please conduct your own research before investing in cryptocurrencies, as neither the author nor the publication is responsible for any financial losses.
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