Bitcoin has begun to turn heads for the past few months, with a sudden surge in value seeing the digital currency soaring above the price of gold. On the 2nd March, the digital currency surpassed the per-spot ounce price of gold, and was trading for a whopping $1,238, as opposed to gold which was listed at $1,237, with the exchange rate that was provided by Bloomberg Markets. This is only the second time that the cryptic digital currency has surpassed the price of gold, but this time, Bitcoin was facing a lot of optimism from retailers and investors beginning to look more closely at the digital currency.
Bitcoin’s price was trading higher than gold until 7th March, but while the digital currency dropped off slightly, it has quickly regained prominence on the market once again – peaking at around $1800 at the beginning of May. The climbing value of the Bitcoin is one of the most interesting market develops, and here, we’re taking a look at what this means for global markets.
Latest Bitcoin Price
The latest Bitcoin price, as of June 5th 2017, is continuing to climb and so far has reached a high of $2,577. Nevertheless, the digital currency is a very volatile market, and while it has spiked in recent months, there have been periods where the Bitcoin has been dropping off and regaining momentum again. It is this extensive volatility that has pushed a lot of investors away from the digital currency. But with the rebound in precious metals looking to be over according to recent inside reports, there is a chance that Bitcoin could fill any gaps in the market where over investments are beginning to falter.
Regulations Stabilising The Market
In December 2016, Japan legalised the Bitcoin as a currency and this has the potential to have an increasingly important effect on the value of the Bitcoin and its market. There are a huge number of different reasons as to why the market has been hiking, with comments from important banking individuals in the US, to the crack-down on the currency in China, and this may have had a huge impact in the stabilisation of the market.
Could Bitcoin Replace Gold?
A huge number of people are looking at Bitcoin as the future of currency, and some people have been questioning whether or not the Bitcoin could even replace gold in the future. Nevertheless, stock market expert Paul Mladjenovic answered a number of questions about the currency and said that investors should in fact be cautious of the currency in a Facebook Live Q&A with Marketwatch. He believes that the Bitcoin market is far more of a speculators market, and that while it has potential, particularly with the way it has been performing over recent months, he would like to see that “it has a lot more stability and the same characteristics of durability that gold and silver have had over not just years, but centuries.”
One place where Bitcoin is beginning to dominate is the online gambling markets, as people are turning to the digital currency as a more secure option for placing wagers online. The growth in Bitcoin gambling is an extremely important step for the digital currency, and with sites like Bitcoin Casino Pro providing reviews and informing bettors of all of the different types of Bitcoin sites that are available, it’ll be no surprise to see people using the Bitcoin more and more as opposed to traditional currency options when it comes to online gambling. How much of an impact this will have on the value of gold however is yet to be seen.
When Bitcoin first surpassed the price of gold back in March 2017, there market began to go crazy, and this bubble still hasn’t subsided. While both Bitcoin and gold are seen as alternative assets, they do not usually trade in correlation with each other. However, the difficulty in investing on the Bitcoin and its volatile nature has generally led people to move away from the crypto currency, which is why many have been sceptical about whether the Bitcoin really will take over gold. But as Bitcoin becomes easier to invest in, particularly with the SEC reconsidering the Winklevoss bitcoin ETF, which would be the first bitcoin ETF in the entire market, more and more investors are likely to turn to this future of currency.
Bitcoin Supply Level
One of the major benefits of the Bitcoin is that its supply level is completely fixed and transparent, which means typical inflationary pressures that are generally associated with overproduction are not set to diminish the asset’s value. As commerce becomes more digitalised over the years, the digital currencies value and importance will only continue to grow. This is something that gold cannot claim, with data from Statista.com showing that there has been a 25.51% increase from 2005 to 2016 in the production of gold. However, the fact that the Bitcoin’s supply level will remain fixed isn’t always a positive thing. While it is certainly set to improve the value of the Bitcoin, a finite resource will ultimately lead to the supply level running out, whereas gold may not be infinite but there is certainly more to be discovered.
Reliability
One advantage that gold and other precious metals have over Bitcoin when it comes to investments is reliability and trust. Bitcoin will generally be faced with issues such as technological disruption or even governments criminalising the digital currency and this could lead to a huge problem for the currency. When it comes to asset investments, trust and willingness to store value is exceptionally important, and this is something that Bitcoin will generally be quite sceptical about. In 1933, President Franklin D. Roosevelt attempted to criminalise the possession of gold in the US, yet it still managed to maintain its value.
How Can It Affect Global Markets?
The global gold markets are highly likely to remain strong, with the likelihood of Bitcoin taking over as the future of currency being an unlikely fate. While more and more investors will be turning to the Bitcoin, gold’s reliability is something that Bitcoin will be unlikely to have. This means that global markets are going to continue turning to gold, until Bitcoin can prove itself to be exceptionally reliable and stabilised. Nevertheless, precious metal markets around the world will be keeping a close eye on the developments of the Bitcoin, and whether or not its value manages to maintain the momentum it has been building in recent years in light of recent regulations and interest from investors.
