According to market analyst and Bitcoin advocate Matthew Kratter, Bitcoin (BTC) is poised to outperform gold in the long run. He advises current Bitcoin holders against selling their holdings to purchase gold, even if gold prices surge beyond $4,000 per ounce.
Bitcoin vs. Gold: A Superior Store of Value?
Kratter contends that Bitcoin serves as a superior store of value due to its inherent characteristics. These include scarcity, portability, verifiability, divisibility, and other monetary properties. He emphasizes the continuous increase in the gold supply, stating:
"The gold supply has consistently grown by 1-2% annually for decades, even centuries. While this percentage may seem small, over the long term, it effectively doubles the total gold in the market every 47 years." This dilution of supply impacts gold's long-term value proposition.
Furthermore, Kratter cautions about the potential for a sudden surge in gold supply due to the discovery of large, untapped gold deposits, whether found deep within the earth or even in space. This unpredictable supply dynamic poses a risk to gold's stability as a store of value.
Kratter cites historical precedent, pointing to the influx of new gold from the Americas into 16th-century Europe. This surge triggered significant inflation, contributing to the decline of the Spanish and Portuguese empires as the market was flooded with an unexpected abundance of gold.
The Digital Age and the Limitations of Gold
Experts continue to debate whether gold or Bitcoin represents the optimal store of value and medium of exchange. Bitcoin proponents argue that BTC is the natural evolution of currency, while gold advocates maintain that Bitcoin is too nascent and volatile to serve as a reliable safe haven.
Kratter highlights the inherent limitations of gold, arguing that they hinder its viability as a monetary foundation in the digital age.
- Costly Transportation and Insurance: Transporting and insuring large volumes of gold are exceedingly expensive, rendering it an inefficient tool for international trade balancing.
- Difficulty in Movement: Even small quantities of gold face challenges when moved through airports or heavily monitored environments. Transporting larger amounts becomes exceedingly difficult.
Gold's Unsuitability for Online Transactions
The physical nature of gold renders it unsuitable for online financial transactions or digital value transfer.
- Inability to Send Online: Gold cannot be transmitted over the internet.
- Risk of Tokenized Gold: While tokenized gold products, representing physical gold held by third-party custodians and represented on a blockchain, exist, they introduce counterparty risks. These risks include the issuer creating more gold tokens than the actual gold reserves, refusing to redeem digital tokens for physical gold, or potential government confiscation of gold reserves.
In summary, Bitcoin's digital nature and inherent properties offer advantages over gold in the modern financial landscape.
Other Market Observations
Recent reports indicate Bitcoin is facing resistance below $92,000 amid risk-averse market sentiment. CryptoQuant suggests a potential bear market has begun, with Bitcoin facing the possibility of a decline towards $70,000.
Disclaimer: This article is intended for informational purposes only and does not constitute investment advice. Investors should conduct thorough research before making any decisions. We are not responsible for any investment choices made based on this information.
FAQs
Should you sell Bitcoin to buy gold right now according to this market analyst?
No, according to market analyst Matthew Kratter, Bitcoin is expected to outperform gold in the long run. He advises against selling Bitcoin to purchase gold, even if gold prices increase significantly.
Why does the analyst think Bitcoin is better than gold as a store of value?
The analyst believes Bitcoin is a superior store of value due to its scarcity, portability, verifiability, and divisibility. He also highlights the risk of gold supply inflation, which could devalue it over time.
What are the limitations of gold compared to Bitcoin in today's digital age?
Gold faces limitations due to the high costs of transportation and insurance, making it inefficient for international trade. Furthermore, its physical nature makes it unsuitable for online transactions, unlike Bitcoin.
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