📖 Your Q2 Earnings Guide: Discover the Stocks ProPicks AI Highlights to Jump Post-EarningsRead more

Bitcoin Is An Equal Wealth Preserver To Gold

Published 10/05/2021, 04:12 AM
Updated 07/09/2023, 06:31 AM
NDX
-
XAU/USD
-
US500
-
DJI
-
US2000
-
GC
-
HGX
-
BTC/USD
-
Gold has more than four thousand-years of history to prove its stability as a safe haven in rough times. And yet, Bitcoin, only around for a bit over a decade, does not need to keep its head low. It might even outperform its historical Goliath in usefulness at times of crisis once we look underneath the hood and compare the two from various angles. Bitcoin is an equal wealth preserver to gold.

At a closer look:

  • Bitcoin is divisible to a much higher degree than gold. This means even small purchases can be made in dire times.
  • It is also more scarce than gold since a maximum of twenty-one million coins defines it, while gold supply is speculative and continuously mined.
  • Where Bitcoin truly shines is in its portability. A long-distance payment in gold can provide quite some hurdles, while a Bitcoin transaction is verified typically within less than an hour anywhere in the world.
  • Verifiability is an easy one for Bitcoin on a computer, and not so easy for gold. From a security perspective, a tiny “USB-like” stick can hold all your wealth when it comes to Bitcoin, while a Fort Knocks is necessary for a more extensive gold amount for protection.

Now that we have established Bitcoin's validity to measure up to the big boys, let's look at its desirability from a chart perspective in regard to acquisition timing.

Housing Sector Daily In US Dollars - Clouds On The Horizon

Housing Sector Index In US-Dollar, Daily Chart

With China’s real estate bubble in bloom and markets intertwined throughout the globe, early warning signals also start to show in the US. The daily chart above of the HLX (Housing Sector Index) gives such an indication clearly. We see a similar picture of a previous swift decline (-50%) setting up at the 200 moving average (orange line) right now. The index, comprising companies whose primary lines of business are directly associated with the U.S. housing construction market, already lost more than 18% from its recent top last May.

Gold Monthly In US Dollars - Everything Is Possible

Gold In US-Dollar, Monthly Chart

Most of the time, real estate is the first turning point for the market to come undone. Closely followed by the Russell 2000, then the S&P 500, Dow, and NASDAQ 100. Precious metals are not spared since money is needed to pay for margin calls. All asset classes get in motion, and so will Bitcoin; rather sooner than later, since “exotics” typically are cannon fodder. No worries, though, it will be in turn also in the early recovery field alongside precious metals.

A look at a monthly gold chart shows a ten-year bullish uptrend followed by a ten-year wide sideways range. Consequently, we are left with two likely scenarios. A trend continuation initiated by a breakout to new highs. And equally a possibility after the wide double top built in August last year that prices decline further down. This especially if Gold comes under pressure of an altogether market crash.

BTC Weekly In US Dollars - Bitcoin Is An Equal Wealth Preserver To Gold

Bitcoin In US-Dollar, Weekly Chart

China isn’t just the forefront threat regarding real estate but also an insight into how strong regulation of a market, in this case, Bitcoin, can have detrimental effects on a market already in a retracement. It is likely that the crypto space and Bitcoin will see a second wave of regulatory attacks in the US.

The weekly Bitcoin chart illustrates that price is stuck in a distribution zone, with a second resistance zone right above (red squares). We find these price levels less attractive from a market low-risk entry perspective. Consequently, we see a more attractive entry point once the market has shown its hand. Now is the time to keep the powder dry and act sensibly after the possible storm shows first signs of clearing skies.

Evolution churns slowly, and gold outperforms Bitcoin by far when it comes to established history. But as much as change might come slowly to human behavior, it is yet a fact that once fuel injection was outperforming carburetors, that sooner or later, everyone wants the better performing car. What we did not mention yet is Bitcoin's advantage over gold in the aspect of decentralization—a new element to money that could come to the forefront of importance faster than assumed just yet.

Latest comments

Loading next article…
Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.