By CCN.com: Investors who are not generating returns in 2019 are clearly looking in the wrong place. Considering bitcoin claimed a fresh 2019 high to nearly $9,400 over the weekend, other asset classes have a hard act to follow. Gains across the stock market and commodities including oil and precious metals such as gold pale in comparison to bitcoin’s, and investors must be kicking themselves for not recognizing the opportunity in crypto. There’s no shortage of explanations as to what is fueling bitcoin’s rise, ranging from the U.S./China trade war to Facebook’s new stablecoin to the Federal Reserve.
The Wall Street Journal illustrated the disparity in the returns, pointing out that while bitcoin is up more than 150% year-to-date, the broader stock market, as well as crude oil and gold futures, is far behind. While the S&P 500 and oil are both up by a double-digit percentage, gold is in last place with returns of less than 5%.
Bitcoin Adding Insult to Injury for Gold
Bitcoin’s gains add insult to injury to gold investors, considering that the leading cryptocurrency is seemingly taking market share away from the precious metal given its store-of-value features. As CCN.com has previously reported, even the most stubborn gold bulls have turned bearish on the commodity in 2019 amid a “dull period.” Bitcoin, meanwhile, continues to shine with no signs of slowing down.
One person that has shaken things up for gold is Barry Silbert, CEO of Digital Currency Group. His firm is behind the #dropgold campaign, and the timing couldn’t be worse for the underperforming precious metal. Digital Currency Group’s bitcoin trust has a value of $2 billion, which Silbert points out in an interview with Real Vision was roughly the size of bitcoin’s value in 2014. Today bitcoin boasts a market cap of $164.7 billion, according to CoinMarketCap. Silbert says:
“The asset class is here to stay…I think it’s now being looked at potentially as an important part of a diversified portfolio…I think the asset class is really ready for the next phase.”
Silbert pointed to crypto industry infrastructure including “institutional grade custody solutions [and] trading software” as signs of a maturing ecosystem.
Rayne Steinberg, who is at the helm of crypto investment management firm Arca, told the Wall Street Journal:
“In this digital world where you have an unseizable, unmanipulatable, uninflatable asset that acts as a store of value, there is going to be a demand for that.”
Demand there is, and with regulated bitcoin futures exchange Bakkt poised to test its contracts next month, this could only be the beginning. There are several catalysts that are creating that demand among big investors, not the least of which include geopolitical tensions between the U.S. and China.
According to Morgan Creek Digital’s Anthony Pompliano cited in the WSJ, bitcoin has emerged as a hedge from the uncertainty given that it does not trade in a correlated fashion to other investment categories. SFOX said: “In May, BTC had a nearly perfect negative correlation with the S&P 500.” This, Pompliano believes, is “why institutional investors should have exposure to the cryptocurrency.”
The bitcoin price is currently hovering above $9,300, up nearly 4% in the last 24-hour period.
Last modified: March 4, 2021 2:36 PM