Is Bitcoin going to replace gold?

Most people in the crypto community refer to Bitcoin as the new gold, especially young investors. They see it as a more valuable investment than gold. Bitcoin has earned the “millennial gold” nickname.

However, the trend may be changing, at least in the short term. Investors have been withdrawing money from Bitcoin futures and funds and putting more money into gold.

Institutional investors mainly drive the ongoing transformation. From an institutional point of view, the flow of Bitcoin started to slow down in 1Q of this year. Later, it became negative at the beginning of the second quarter. In contrast, retail traffic has remained relatively stable overall.

Bitcoin’s volatility, especially the speed at which it tends to decline, contradicts the more excellent price stability of gold. However, the reasons behind this change are unclear.

What could bitcoin and gold have in common?

Some investors believe that Bitcoin is a gold-like asset. Bitcoin’s store of value is maintained during inflation and when the central bank prints money. This argument has convinced some prominent hedge fund managers, such as Stanley Druckenmiller. He prompted the price to rise above $60,000 last month. Druckenmiller and others say that Bitcoin cannot wholly replace gold. However, some analysts have found that it has been stealing the limelight of gold.

Since hitting a record high of nearly $65,000 in mid-April, the value of Bitcoin has lost about half. The last transaction price on Wednesday was about $35,470.

Surprisingly, contrary to the 4Q of 2020, the recent Bitcoin outflow funds have been accompanied by the gold ETFs inflow.

The current Bitcoin market situation made many investors move back to gold.

How are gold prices doing?

The price of gold now seems to be relaxing. On Wednesday, however, the yellow metal was also trading in the red. Silver futures for July delivery are trading in the negative zone.

On Tuesday, the price of gold in the capital rose by 333 rupees to 47,833 rupees per 10 grams, in line with the rise of global precious metals. In previous transactions, the closing price of precious metals was 47,500 rupees per 10 grams. The demand for silver has also increased, rising from Rs 71,101 per kilo in the previous trading day by Rs 2,021 to Rs 73,122 per kg.