According to analysts at Germany-based investment bank Deutsche Bank, Bitcoin’s appeal is growing as an alternative store of value assets.
“There seems to be an increasing demand for Bitcoin rather than gold for hedging the dollar, inflation and other risks,” said Jim Reid, head of global core credit strategy, as quoted by ZeroHedge. Bitcoin has long been viewed as digital gold by its investors, due to its limited, predictable supply and its use as a store of value outside of banking impact.
Bitcoin gained 144% this year, while gold rose 22%. Both assets seem to have benefited from inflation-boosting monetary and fiscal policies initiated by central banks and governments around the world to contain the economic consequences of the coronavirus outbreak.
Bitcoin Rises 25% This Month alone
The coin has surged over 25% this month alone, despite hopes for a rapid global economic recovery in potential coronavirus vaccines and increased risk appetite in stock markets. However, gold has maintained its reputation as a safe haven, down 1% so far this month.
According to Reid, the difference between gold and silver on the one hand and Bitcoin on the other is one of the oddities of this month. US-based drug makers Pfizer and Moderna announced encouraging results for their experimental coronavirus vaccines earlier this month, triggering the transformation of money from gold and other heavenly assets into risk assets.
Reid told Bloomberg earlier this month that coronavirus vaccines are equivalent to global financial incentives. Christian Nolting, chief global investment officer for Deutsche Bank Asset Management, said inflation could rise moderately in 2021 and 2022 and would be good for stocks and gold.
As of the time of publication, Bitcoin is traded around $ 17,682, while gold changes hands at $ 1,860 per ounce.