What the feedback shows and what the experts say

What the feedback shows and what the experts say
What the feedback shows and what the experts say

Around this time last year, a comparison between Bitcoin and gold surfaced, with the former’s returns beating those of the yellow metal for a few years in a row. But this year, gold returns have beaten Bitcoin hands down, according to data from Augmont Enterprises Private Limited, a gold trading firm.

Among other factors, some experts view both assets as a store of value. Amanjot Malhotra, Country Head, Bitay, a global fintech company focused on crypto assets, blockchain, artificial intelligence, IoT, etc., said that one of the most common reasons to buy both gold and Bitcoin is that they are a store of value in economic times. uncertainties.

Gold vs. Bitcoin: Overall Returns

Whereas Bitcoin jumped nearly 1,300% in 2017-18, gold saw returns of around 6.3-7.3%. In 2019-20, 2020-21 and 2021-22 as well, Bitcoin gained significantly more than gold (see chart). However, since the start of the year, bitcoin has fallen almost 57% against a positive return of more than 4% for gold.

Gold demand was healthy in this festive season. The India Bullion and Jewelers Association (IBJA) estimates that around 39 tonnes of gold, worth Rs 19,500 crore, were sold during the two days of the festival.

Chart showing the multi-year return of Gold and Bitcoin (BTC) Sources: Crebaco Gold and Augmont Enterprises Private Limited

What the experts say

Unlike the gold industry, the cryptocurrency market lacks stability. “It (the gold) has been there with us for ages; it is among the most liquid forms of assets and investments and has consistently delivered positive returns over long periods of time,” says Aditya Modak, co-founder of Gargi by PN Gadgil & Sons, a jewelry group.

Moreover, digital assets carry high risk due to volatility, experts say. “Investors have already seen this (Bitcoin) soar and plunge to record lows in a short time. So looking at this, conservative investors are inclined towards traditional low-risk assets,” says Nidhi Manchanda, Certified Financial Planner and Head of Training, Research and Development at Fintoo.

But Bitcoin supporters believe that its fundamentals are positive, although disconnected from its current price. “Looking at a few metrics like Bitcoin network hash rate, Bitcoin adoption, and Lightning Network adoption, it’s clear that most of Bitcoin’s fundamentals are on an upward trajectory,” says Mohammed Roshan, CEO and co-founder of GoSats, a bitcoin rewards app.

They also think the crypto winter is short-lived. “I don’t expect the price to stay deflated in the long term. It should also be kept in mind that compared to other assets, the Bitcoin market is nascent and currently being affected by macroeconomic headwinds,” Roshan says.

Malhotra says Bitcoin never took more than three to four years to regain its price. “This suggests that in the long term, BTC could be a store of value,” he says.

. feedback shows experts

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