Hi All,
Firstly I would like to share that this is my first post on leo finance, so I am not sure what I have to do and if I have done it properly, so sorry about that. After this is out of the way...
I hope you are having a great weekend so far and todays sell-off did not ruin your mood. Actually it might be a good thing, so we can get rid off the over-leveraged players and start a new leg up.
One of the best things about sell-offs/corrections is that you can identify the new leaders of the new cycle - So far it looks like LUNA MANA SAND ETH have recovered extremely well. We should be extremely pleased if ETH manages to hold the 4000$ support level - it will be "HUGE".
However this post is not about todays situation rather than something else. Since I heard about bitcoin in 2016, people have been comparing Bitcoin to Gold, the digital gold. As time passed and Bitcoin became a force to be reckon with - the paradigm shifted - "Bitcoin is a lot better than gold, it is not the digital gold, it's the new gold!"
Let's go back in history of money
In the history of the world human kind have used different kind of money - gold coins, silver coins, copper coins, stone coins,etc. Eventually we settled on gold coins - but gold has never been fast enough. You cannot move large quantities of gold, so people started using ledgers As Michael Saylor puts it "money is that shared ledger of who owes what to whom" This is way back when money on paper was actually backed by gold. So we can't move fast enough large quantities of gold and even if we do, we need a centralised figure - merchant, emperor, bank or whoever to "validate" the transaction. We don't even consider the cost of moving goods.
On the other hand we have bitcoin - the ultimate ledger of "who owes what to whom" and transactions are almost instant, and oh - it's decentralized.
We won't discuss - scarcity, regulation and volatility of the two assets in this post.
So with a high degree of certainty - 1:0 for BTC.
The second imporant topic is
Bitcoin or Gold is the better Inflation Hedge?
Recently - one of the biggest banks released a note "According to JPMorgan -
Institutional investors appear to be returning to Bitcoin, seeing it as a better inflation hedge than gold."
Of course it is early to make definitive comments on the matter, as Bitcoin has been around for a decade and in this decade we have not seen world-wide pick-up in inflation rates as Central Banks's targers are 2-3% yearly inflation.
But we have seen the Bitcoin inflation-hedge use case many times in the last years - El Salvador, Venezuela and Turkey are some of the most recent examples where Bitcoin is seen not only as an "inflation hedge" but as a tool for leading a normal live, where your earnings do not disapper overnight - even considering BTC's volatility.
For the past year things have started to change drastically - The FED doesn't state that inflation is "transitory" any more. Prices of almost all commodities (ironically except Gold and Silver) have soared drastically, leading to price increase in almost all walks of life - inflation.
So in conclusion - We can not so far determine which asset is a better inflation hedge. Time will definitely show - but if we follow the money (not only speculative money) it leads to Bitcoin. You can seen in the chart below.
Gold Weekly Chart - it has yielded around -6% Year to date. Bitcoin has yielded 55% YTD even after this mornings correction
So, Bitcoin 2 - Gold 0
Bitcoin or Gold as Safe Heaven
Another tough one to answer - Gold has been seen as a safe heaven for decades. And it has endured and thrived in a lot of market conditions. The only real "crash" that Bitcoin has seen is March, 2020, when it dipped below 4000$ (still kicking myself for not buying the MEGA dip...."
After this being said it is really difficult to compare Bitcoin vs Gold as a Safe Heaven, BTC is surely not designed to be a safe heaven, but it could become one.
If I have to be honest, I believe we can give this one to gold. As it is proven for hundreds of years. There is a track record, I hope BTC overtakes gold in this instance as well, but time will show.
Final Result 2:1.
Wow, this casual 15-20 min writihg a post turned into 3 hours solid. Hope you like what I thought worth sharing!
Off to the pizza place, to enjoy the cheat day.
Take care and stay healthy.