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• Goldman Sachs more bullish on gold than bitcoin
• Gold offers protection against inflation and dollar depreciation
• Gold is a better portfolio diversifier than Bitcoin
For some time now, supporters of gold and bitcoin have been at odds over which is the better asset. Meanwhile, some market participants also refer to Bitcoin as “digital gold” and hope that it will protect against inflation. Now the experts at the investment bank Goldman Sachs have sided with the yellow precious metal and announced that, in their opinion, gold will outperform the original cryptocurrency in the long term.
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Numerous demand drivers
Bitcoin is facing headwind from the clouded financial conditions. Goldman Sachs, on the other hand, assumes that gold will be less affected by the tighter monetary policy of the central banks and the associated reduced liquidity: “The precious metal with its real demand drivers is not as strongly influenced by the restrictive financial policy as the world’s largest cryptocurrency,” according to the Goldman Sachs experts.
Analysts list a number of demand drivers for the yellow metal: physical demand, record central bank purchases, gold purchases for risk hedging and industrial applications.
Gold more useful for portfolio diversification
In addition, according to the analysts, gold will benefit from structurally higher macroeconomic volatility and the need to broaden the portfolio in the future. Gold is better suited for this diversification than bitcoin because, unlike the cryptocurrency, it has clear, non-speculative applications.
Bitcoin has lost around 60 percent of its value in the last twelve months, while the price of gold has remained stable. According to Goldman Sachs experts, this is related to the fact that market participants see gold as a hedge against dollar depreciation and inflation. Bitcoin, on the other hand, is treated like a “risk-taking stock of a high-growth technology company.” Its potential lies in possible future applications, so the popular cryptocurrency is currently still a “solution in search of a problem,” according to the investment bankers. “This makes Bitcoin a much more volatile and speculative asset class than gold” with its already established use cases, is their conclusion.
Insolvency of the crypto exchange FTX and Co. burden
The problems of numerous crypto companies, such as the crypto exchange FTX or the hedge fund Three Arrows Capital, also have a negative effect: “The downward volatility of Bitcoin was also amplified by systemic concerns, as several large players have filed for bankruptcy,” it said in addition the Goldman Sachs research report.
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