Bitcoin vs. gold. Who ya got?
Bitcoin has made it back into the news cycle due to its rapid climb over the past few months but is it really true that the cryptocurrency now has the status as a quasi-safe haven for your money, much like the role gold plays during times of economic uncertainty?
Not likely, says Marcus Swanepoel, CEO of cryptocurrency company Luno, who admits that the vast majority of action on Bitcoin is from speculators.
Bitcoin on Monday continued to hover around the $10,000 mark, trading up 2.6 per cent as of midday. The cryptocurrency has had a remarkable run in 2019, rising from a low in the mid-$3,000s this past December to gains of over 200 per cent and hitting a high of $12,575 in early July. (All figures in US dollars.)
But gold has also been on the rise in 2019, leading to thoughts that the fear that the current bull run may be sputtering to its conclusion may be driving some investors towards Bitcoin.
But the crypto’s rise has less to do with market cycles and more about the growing perception that cryptocurrencies are a good long-term play. So says Swanepoel, head of UK-based crypto investment services company Luno, who spoke to CNBC on Monday.
Bitcoin vs Gold. It’s not close…
“I think that there are a lot more people using Bitcoin now in the US and Europe and Africa and certainly Southeast Asia, and this all works together to affect the price,” said Swanepoel.
“[But] a lot of people take a very long-term macro view on Bitcoin. They take a ten, twenty-year view on it,” he says. “We are on a broader macro cycle for cryptocurrencies which I think is underlying a lot of that [growth], but then within that context, yes, when people get nervous about some other asset classes, some people might be using Bitcoin as a safe haven but I would say that that’s a minority when you compare it to gold, for example.”
Bitcoin passed a milestone of sorts this week when it crested over the $100-billion mark in realized market capitalization, which denotes the current circulating supply of the coin multiplied by its current market price. Well-known cryptographer Nick Szabo took to Twitter on Monday to further his endorsement of Bitcoin, saying, “The long-term chart reflects the superior deep safety, global seamlessness, and monetary soundness of Bitcoin.”
“Longer term, I think Bitcoin will absolutely be a safe haven,” said Spencer Bogart of Blockchain Capital, to Bloomberg news on Monday. “We see Bitcoin evolving as it goes and I think right now it’s in this intermediate stage where you really have to think, ‘Well, what are the risks and how severe are they?’ I think that when you have looming risks of monetary devaluation and things like this, Bitcoin certainly looks very attractive, and I think that that was a large driver in the recent run-up in price.”
“But when you think about really severe crises taking place —a liquidity crunch, another global financial crisis— I think that Bitcoin will struggle to do very well from a price perspective,” he says.