Gold-Backed Tokens Outperform Crypto Market. Further Upside Coming?

The crypto market has been on a recovery trend lately. Even with the market crash, it had already marked a year of massive returns for investors in the space. As is expected with a space with high volatility, crypto assets had begun to crumble in value. But despite the profitable year for cryptocurrencies, a subset of crypto tokens had made their mark as the assets with the highest returns, and they don’t look to be stopping anytime soon.

Gold-Backed Tokens Surge

These gold-backed assets have helped to increase the liquidity of gold by enabling the ownership of small fractions of gold. Physical gold is somewhat limited in its supply and tokens like this have provided an avenue for investors to get in on the millennium-old asset. These tokens follow the price of a commodity, gold in this case, in the same way, that stable coins follow the price of the fiat currency they are pegged to.

Unlike gold ETFs, gold-backed crypto tokens allow investors to own a part of a physical gold bar, whereas investors are mainly betting on the price of gold with ETFs. Furthermore, investors are able to redeem their gold-backed tokens for physical gold whenever they want.

These characteristics have drawn more and more investors to these commodity-backed crypto tokens and as a result, the price of these digital assets has grown tremendously. So much so that these assets have been able to outperform the crypto market at large.

Gold-backed tokens soar

Gold-backed tokens outperform crypto market | Source: Arcane Research

Two of these gold-backed commodities have recorded the highest growth; Tether Gold (XAUT) and PAX Gold (PAXG). These two crypto assets have grown to a market cap of $409 million and $358 million respectively, marking a significant growth year for each asset.

Beating The Crypto Market

Even with the crypto market marking several bull runs in 2021, gold-backed tokens have managed to outperform the market. In 2021, the overall crypto market had grown a total of 150%. In contrast, the gold-backed token market surged as high as 360% in the same time period, returning more than twice that of the broader crypto market, with PAX Gold and Tether Gold leading the charge.

Other commodities-backed crypto tokens have also begun to gain prominence in the market. Others have emerged that have been tied to silver, palladium, and even oil, but all of these have been met with obstacles that they have found hard to scale, stunting their growth.

Nevertheless, the gold-backed tokens have shown that commodities-backed tokens do have a future in the market. With growth expected to continue across the crypto market, these tokens may be on their way to being one of the most profitable subsets of crypto investments in the space.

Bitcoin vs. Gold: Which is a Better Buy this Fall?

Both assets provide a wide range of benefits to portfolios though which one comes out on top?

 

With central banks all over the world seemingly having a debasing contest over their currencies, and as inflation looms, it might be the time to revisit those inflation hedging strategies.

Naturally, the hot topic is: between Bitcoin and gold, which is the best inflation hedge and superior hard money?

We’ve compiled several traits and compared the two. Here’s what we’ve found:

Historical evidence

Gold has been a trusted store of value for millennia, whereas Bitcoin is a new disruptive tech and despite its short existence, it has faced and endured its trials and tribulations and is still very much standing, making it clear that it is here to stay.

And the longer Bitcoin sticks around, the higher the public’s confidence levels will reach.

Scarcity

Having unlimited supply does not correlate with being a good store of value. By design, Bitcoin supply is capped at 21 million. Gold has always been scarce throughout history, but it also has certainly seen increases in its supply.

Intrinsic Value

Gold has intrinsic value as a commodity as there is demand for gold in several industries, outside its basic functions of money. Bitcoin, on the other hand, does not.

Moreover, if people by lack of confidence do not accept it or its monetary functions, Bitcoin will simply have no value.

However, having no intrinsic value can also be a positive trait as if it has no other functions, it is also not a subject to supply shocks.

Fungibility

For an item to be fungible, it must be able to be replaced by another one exactly like it. As such, exchanging a bar of gold for another bar could be regarded as easier than exchanging Bitcoins as, despite having the same value, Bitcoin’s traceability on the blockchain may make some comes not so fungible as they can be linked to illicit trading and thus not be accepted by merchants.

Gold, however, retains its value and even if it is centuries old, it can still be accountable in our days. With that being said, there are very encouraging signs that Bitcoin’s network will work on improving both its privacy and anonymity as well as its users’.

Durability

Despite showing clear signs of durability, it is still too early to comment on Bitcoin as many believe the network is still at its infancy and regulatory actions or hackers might try hamstring it. Gold, on the other hand, has been around for many centuries and has since been able to retain its position as a valuable asset and store of value.

Divisibility

Although gold can be divisible by weight, unlike Bitcoin’s proposition, gold can hardly serve the purpose of being a medium of exchange in society.

Transportation

Comparing the two here is stating the obvious. Whereas transporting gold is risky, time consuming, and a very difficult endeavor, Bitcoin can process transactions across the world at the speed of lightning.

Authenticity

Gold’s authenticity is easily verifiable. Bitcoin’s authenticity is verified by cryptographic signatures, mathematical formulas, and a decentralized network, all of which working in unison.

Confiscation and Resistance to Censorship

Bitcoin is decentralized and distributed in a peer-to-peer network, making it very resistant to censorship, whereas gold’s physical properties can make it both challenging in terms of mobility and susceptible to being regulated.

In what concerns confiscation, there have been laws which made gold ownership illegal. Moreover, when transporting gold, confiscation risks might be looming depending on the value being transported. Bitcoin is less prone to confiscation.

Wrapping up

We’re inclined to say that Bitcoin outperforms gold in many of these categories, but not all of them.

Some may say that Bitcoin is probably the hardest form of money ever to be created while others claim it is risk prone as it is still a nascent technology.

But even though gold has proven itself as money for millennia, withstanding the test of time and earning its trusted status, Bitcoin’s astonishing potential upside makes us think that it might be good to consider having both of them in our portfolios.

Bitcoin Vs Gold – Is PlanB comparing apples to oranges, or is BTC at $135K still in play?

  • PlanB reignites Bitcoin vs gold debate: Will BTC reach $135K by Dec 2021?
  • PlanB’s latest tweet reignites the Bitcoin vs gold debate
  • At current rates, 1 BTC is equal to 18 ounces of gold
  • PlanB predicts that BTC denominated in gold is set to rise further

PlanB, the famed crypto analyst and stock-to-flow expert, has broken his self-proclaimed six-week hiatus from crypto predictions. In his latest tweet, he has once again bought the Bitcoin vs gold debate at the center by claiming that BTC denominated in gold will rise in value in accordance with BTC value.

It is a universal fact that gold has been a time-tested storehouse of value. For centuries, people have used gold to store and pass on their wealth to future generations. Governments have relied upon gold to secure their financial credibility.

The gold standard was the De Facto currency benchmark until 1971 when the U.S. dollar was delinked from gold.

Now, Bitcoin promises similar value storehouse characteristics. Modern financial pundits often compare Bitcoin with gold considering its price movements in volatile times, which mimic other safe-haven assets. But to what extent is the Bitcoin vs gold debate valid, and for how long?

PlanB opens up Pandora’s box – BTC denominated in gold sends positive vibes

For a few years now, Bitcoin price movements and correlation with gold have fascinated crypto analysts. During the 2020’s March crash, Bitcoin showed similar safe-haven characteristics by rising in accordance with the turbulent times. So far, Bitcoin has outperformed gold by a significant margin, especially in the last year.

PlanB, known for his highly bullish crypto tweets, claimed that BTC could touch $2,88,000 by 2024. The bullish BTC price prognosis comes from his famed stock-to-flow analysis, which uses complex forecasting technical indicators.

Despite the recent price dips and stagnation, the price is going to entice the traders and investors to HODL.

His studies always seem fixated on overly bullish long-term price goals. Even in the worst case, PlanB says that BTC would cross $1,35,000 by the end of 2021. These lofty price levels may seem unreal, but he has a huge fan base that believes in his technical analysis.

BTC/USD stock-to-flow model – Is Bitcoin vs gold comparing apples to oranges

With an all-time high of $64,000, Bitcoin is far from the PlanB’s predicted levels. Multiple charts show that heavy to very-heavy resistances are blocking the Bitcoin’s journey to fresh highs. At present prices, 18 ounces of gold are equivalent to 1 BTC.

Bitcoin price is hovering near $34,000, and it is a long journey from here to $1,35,000, considering there are only five months left in 2021. Calls for another bearish phase in BTC are growing as the digital asset aims to integrate more into the mainstream finance.

PlanB’s latest cryptic tweet has certainly ignited the Bitcoin vs gold debate in the crypto circles no matter the price.