All the bitcoin traders have the question raised in them that whether the bitcoin fades the shine of gold and the bitcoin will become the new gold? According to Goldman Sachs, the answer to this question is ‘no’.
Throughout the year of 2017, the market value of bitcoin has raised to the unimagined and new record heights. Comparing to gold which has a market value worth of $8.3 trillion bitcoin pales with the market value of $282.8 billion. This emphasises the answer of Sachs. Even if it is combined with the crypto market value into consideration, the bitcoin has $466.7 billion which is still far away from the value of gold. And from this that the analysts Goldman Sachs came to the answer and, according to him the digital currency is unlikely to attract investors away from the yellow metal.
Bloomberg reports that:
“While the lack of liquidity and increased volatility may keep bitcoin interesting, it’s unlikely to convince investors looking for the kind of diversification and hedging benefits which gold has proven to possess over its long history”.
The bitcoin community has recently witnessed the launch of the Cboe Global Markets futures contract which was allowing investors to bet on the price of the digital currency. After the first full day of trading, yesterday, the cryptocurrency has shown its value rise above $17,000. At the beginning of the year, it was started with $1,000 which came to a long way triumphs all the obstacles in its path.
Many of the traders are seeing the futures contract as a way of pushing bitcoin further into the mainstream. Goldman Sachs outlined several reasons why it won’t become a substitute for the gold.
Reasons for the non-substitution of Bitcoin fo Gold
The first reason he said was that investor pools are mostly different. According to the bank, gold investors are covered by anti-money laundering (AML) and counter-terrorist financing (CTF) regulations. But when it comes to the digital currencies there is little clarity on how they would obey these rules.
The second reason he says is that there have been no distinguishable gold outflows from ETFs. Goldman Sachs state that bullion-backed ETF holdings near the highest since 2013.
The third thing analysts point out is that the market characteristic is different for gold and cryptocurrencies. He argues that the bitcoin is attracting more speculative inflows than the gold.
He added that:
“While bitcoin has a mathematically certain total supply, and gold has a finite (but less certain) supply in the earth’s crust, the composition of demand between bitcoin and gold is the key difference”.
So, many have commented that the digital currency is like gold and it is gold. One among them is the billionaire hedge fund manager and bitcoin bull Mike Novogratz. According to the former Fortress manager, he is of the opinion that the digital currency market has the potential to reach $2 trillion by the end of 2018.
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