Is Bitcoin better than gold? This question has fascinated the Bitcoin community since its inception, with proponents of both assets vying for a better position. Many, in fact, have even termed Bitcoin as ‘digital gold,’ with the cryptocurrency emerging as a store of value in most eyes.
MicroStrategy CEO Michael Saylor is one of the latter. The exec even went as far as commenting that hedge funds will soon start dumping their gold for Bitcoin as the former gets demonetized.
While more and more hedge funds are now turning to crypto as a portfolio diversification tool, just why is Bitcoin a better investment than gold? Speaking to Kitco news, US Global Investors CEO Frank Holmes highlighted some of the reasons why he believes this to be true.
Despite his investment management fund being primarily involved in precious metals, Holmes noted that the possibility of them taking off like Bitcoin doesn’t seem to be real for the foreseeable future. This, because institutions investing in the gold face the risk of getting scrutinized by big financial institutions like banks.
On the other hand, Bitcoin’s decentralized nature makes it a more appealing asset to investors in comparison. It also has an edge over gold because it’s a private property while also being highly portable, Holmes added.
Its analogous nature also gives it technological leverage over investors, especially younger ones.
A recent survey of institutional investors had found that Bitcoin’s “innovative technological play” was the second-most popular factor behind its appeal. Moreover, Bitcoin’s presence on social media platforms like Reddit also acts as a critical gateway for young investors in this digital era.
According to the exec, before institutional investors started to flood the space this year, retail investors were attracted to the digital asset due to its limited and known supply cap. This is something the precious metal can’t boast of, he pointed out.
Now that institutional investors are getting increasingly interested in the space, what can CEOs do to ensure they remain influential across both asset classes? According to Holmes, they would have to reposition their offerings and diversify in a way that ensures customer satisfaction.
It’s no wonder then that his firm recently revealed holdings worth $566,389 in Greyscale Bitcoin Trust shares. These were distributed among 3 funds originally dedicated to precious metals, oil, minerals, and other natural resources.
In any case, gold prices have been facing a point of stagnation for a while. Its price is falling YTD, at a time when inflation and economic stagnation are omnipresent. On the other hand, Bitcoin was recording a positive ROI of over 300%, at press time.
At the same time, institutional interest in Bitcoin is only increasing by the day. The aforementioned Fidelity study had found that 37% of the surveyed investors owned Bitcoin in their or a client’s portfolio. What’s more, institutional Bitcoin adoption in places like Europe has grown by 22% from last year.
Now, with gold bugs like Holmes openly expressing their leniency towards Bitcoin, institutional inflow could very well be unstoppable.