The price of bitcoin reached a new high of $6,043 overnight, but has since eased back to just under the $6,000 mark. It comes as analysts continue to speculate on how high the enigmatic currency can climb, while others have been scrutinising the bubble-like qualities bitcoin continues to demonstrate.
It’s been hailed as digital gold for some time now, but one Forbes editor Panos Mourdoukoutas (who chairs the Department of Economics at Long Island University) believes it may have finally replaced gold itself. This could account for the recent surge in price.
Bitcoin surpassing gold?
In the wake of North Korea’s ongoing missile launches, people are growing cautious. Normally, this uncertainty would drive up the price of gold. But that isn’t happening. Instead, Panos believes bitcoin has dethroned the precious metal.
‘Once, gold was the hedge against uncertainty, the asset where investors could park their cash in times of political and economic turmoil. Now Bitcoin is taking its place, as evidenced by the performance of the two assets in recent months.’
He furthers his claim by pointing to the fact that the Asian region is one of the biggest adopters of bitcoin. He believes that as North Korea grows bolder, people are turning to bitcoin as a money haven…a title traditionally held by gold.
On Wednesday, trades for bitcoin in Japanese yen made up just under half of total trades, at 46%. But trades in China and South Korea only accounted for 12% each. Meanwhile, the US accounted for just under 25%.
Perhaps there is substance to his logic, or maybe Japan is just a country full of early adopters. It still seems far too early to say, one way or the other, whether bitcoin is more popular than gold. For starters, gold is far more accessible for the average investor.
However, our long-term view is firmly centred on bitcoin. There is no denying that it has gained a tremendous following in recent months.
Does that mean gold will be obsolete? Probably not, but who’s to say? We’re backing bitcoin because we want it to deliver on its promise as a decentralised, open form of currency.
Bitcoin price going further
So when we see achievements like today’s, we’re certainly happy, but we’re not looking to cash out. Similarly, the doomsayers who believe that an imminent crash is coming for bitcoin don’t particularly faze us either.
In our view, this is a zero-sum game — fiat versus crypto — and the winner takes all.
Make no mistake: The risks are high, but the payoff could be a once-in-a-lifetime reward. Plus, it’s still early days. This is an opportunity to get in before it reaches the masses.
But don’t take my word for it. Sam Volkering has been following bitcoin and cryptos since 2010. He’ll show you why this sector is booming and how you could reap the rewards. Join him as he explores the secret world of bitcoin.
Junior Analyst, Money Morning