Many believe that Gold has a new competitor in the form of Bitcoin.
In the digital world, investors are preferring to invest in Bitcoin as a safe investment. But the size of the total market is so small, that it is not even one per cent of gold’s market. Bitcoin has a market cap of $60 billion (Dh220.3 billion), and is increasing at a rapid pace every minute, whereas gold has a market cap of $7 trillion.
“People talk of Bitcoin as the new digital gold 2.0. Despite the fact that we have reached an all-time high, Bitcoin is only about $55 billion of worldwide value,” said BTCC chief executive officer Bobby Lee.
Room for appreciation
But unlike gold, experts feel that Bitcoin has more upside.
“All the asset classes are at trillion-dollar levels. Gold itself is at $7 trillion, and many of the assets classes are much higher. Bitcoin is just 1 per cent of all the gold out there. I think, as a substitute for gold, Bitcoin has a room for a lot of price appreciation,” Lee said.
For example, gold has shed 5 per cent so far in the year in value, compared to a staggering 412 per cent gain in Bitcoin.
“My take is that the rally that you see now is driven by speculation. There is a growing belief that Bitcoin prices are going to go up in the long term and this has become a self-fulfilling prophecy. The wider international recognition and potential regulatory approval for the proposed Bitcoin ETF are events that can create upsides,” Promoth Manghat, CEO, UAE Exchange said.