Bitcoin and Gold are surging once again as global stock markets experience ongoing selloffs following a fresh spate of U.S. tariffs imposed on Chinese imports.
Last Friday saw a drop of 2.4 percent globally as U.S. President Donald Trump announced plans for further 10% tariffs on $300 billion worth of Chinese goods from September. The FTSE 100 fell a further 2.1 percent this morning as markets opened, with the Hang Seng losing 2.9 percent, the Nikkei 1.7 percent and the DAX and CAC losing 3 percent.
Bitcoin and Gold have taken significant gains from the lack of confidence in global stock markets, with BTC jumping 12 percent as Asian markets woke today. The price of Bitcoin surged through resistance at $11,000 and continued all the way towards $12K but was met with strong resistance at $11,800. It is now trading sideways in this range.
The sell-off means the Chinese Yuan (RMB) has hit a 10-year low against the U.S. dollar (USD), rising to over 7 yuan to the dollar – a significant psychological level. As a result, Chinese investors are moving money into Gold and Bitcoin as a means of safekeeping against further losses, similar to the move in 2016 that precipitated the 2017 bull run.
At the time, China had issued a ban on all cryptocurrency trading in September 2017 in the run-up to the epic $20,000 rally. However, its stance towards cryptocurrencies appears to be improving now. Recently, a major Chinese bank posted an infographic on its website explaining what cryptocurrencies are and how they work.
The Gold vs Bitcoin Debate
In a recent interview with CNBC Africa, Bitcoin bull Anthony Pompliano debated with the long-time trader and Morgan Creek Digital co-founder Peter Schiff whether Gold was a better or worse investment than Bitcoin.
Schiff reasserted his long-held belief that Bitcoin has no value and is simply a speculative asset, criticizing investors for having “pie in the sky delusions about how the price will go.”
In response to the claims that Bitcoin has no value, Pompliano pointed out that Gold can’t actually be used to buy anything and is simply a store of value. While Bitcoin is not widely used to make payments yet, the possibility at least exists. Despite this, Schiff reiterates that even in the event of citizens losing faith in traditional fiat, they would turn to Gold as a store of value over Bitcoin.
“But if there is even a 1% chance that you could be wrong”, states Pompliano, “you will be kicking yourself forever for having known about this and missed the opportunity.”
The debate regarding Gold and Bitcoin stems largely from crypto enthusiasts referring to Bitcoin as digital gold. However, in reality, the assets are so vastly different in every way that the analogy seems illogical. Gold is, in essence, a mineral, a metal that has an objective, physical use beyond finance.
Bitcoin may one day be used as a means of payment or will simply remain a store of value but it can never be used to create a physical object. For this reason, comparisons of this nature seem unconstructive in the greater scheme of things. Comparing them simply as two stores of value holds some weight, and in that sense, each one offers different benefits depending on the individual’s needs.