While Bitcoin has enjoyed a high level of acceptance both from investors as well as recognition from the mainstream media, many gold proponents believe its meteoric rise is a bubble.
Bitcoin (BTC) price continued the bullish rally which it began towards the end of 2020, on Friday as it recorded a new all-time high value against Gold, its counterpart asset in use as a hedge against inflation. Moreover, today Bitcoin has managed to hit a new peak of over $30,000. At the time of writing, the asset is trading at $30,433.24 (+3.69%).
According to a Cointelegraph report, the price of one Bitcoin against Gold surpassed the record set by the asset in December 2017 as it crossed the $29,000 hurdle, amounting to 15.40 gold ounces. A U.today report confirmed this growth noting that Bitcoin’s price peaked out at 15.62 in the early hours of Friday.
While Gold saw a relatively bountiful growth in the previous year 2020, its 25 percent growth recorded was dwarfed by that of Bitcoin which surged by over 314% in the same year. The reason for the disparity was obvious, numerous institutions particularly the big money guys on Wall Street began betting big on Bitcoin as the pandemic rages on. These institutions include but not limited to MicroStrategy Incorporated (NASDAQ: MSTR), Grayscale Capital, and Square Inc (NYSE: SQ).
Amongst the point of attraction that the majority of these firms saw was the potential value raise for Bitcoin as fiat currencies were been devalued in the wake of excessive money printing for use as COVID-19 stimulus packages. This potential increase in value due to the volatility of Bitcoin was also the reason why some of these investors began shunning Gold for the BTC in the better part of last year.
Scarcity to Drive Bitcoin Price Higher Than Gold This Year
The embrace of Bitcoin that led to its record valuation against Gold got a remarkable boost last year. However, this year 2021 will likely be filled with more demand from new investors to be matched with a limited supply.
This supply scarcity will be fueled by the technical nature of BTC as the coin has a maximum supply limit and the difficulty of mining BTC has increased since the coin’s last halving which happened in May last year. Additionally, the massive stock-up of large amounts of Bitcoin by institutional investors as well as the likes of PayPal Holdings Inc (NASDAQ: PYPL) and Square’s Cash App which holds a sizeable amount of this coin to service the demand on its apps, can further drive scarcity which has the potential to cause a further rise in the value of Bitcoin.
BTC-Gold Sovereignty Battle Continues
While Bitcoin has enjoyed a high level of acceptance both from investors as well as recognition from the mainstream media, many gold proponents believe its meteoric rise is a bubble that will not stand the test of time in comparison to gold. As such, as we expect more bullish activity in the bitcoin and cryptocurrency ecosystem this year, Bitcoin and Gold will also slug out the sovereignty battle in determining the best asset that can serve as a hedge against inflation.
Benjamin Godfrey is a blockchain enthusiast and journalists who relish writing about the real life applications of blockchain technology and innovations to drive general acceptance and worldwide integration of the emerging technology. His desires to educate people about cryptocurrencies inspires his contributions to renowned blockchain based media and sites. Benjamin Godfrey is a lover of sports and agriculture.