Bank of America expects the price of gold to rise to $3000 over the next year or two. Supporters of bitcoin are sure that “digital gold” will become more expensive during the crisis.
Due to the economic crisis caused by the coronavirus pandemic, Bank of America revised
its forecast for the gold market and expects its value to grow to $3000 over the next two years. Bitcoin enthusiasts believe this scenario is also true for”digital gold”.
In the past few weeks, many Central banks have been printing money and pumping it into the economy in an attempt to revive markets. As a result, safe haven assets such as gold are on the rise. The cost of the precious metal has already exceeded $1,700. The last time the price of gold was at these levels was 7 years ago.
Venture capitalist Tim Draper (Tim Draper) claims that the limited emission of bitcoin protects it from inflation, which has become an attribute of the monetary system against the background of recent measures by national governments.
“Such a frenzied flow of new money to the markets will reduce their value. At the same time, the number of bitcoins will always be 21 million BTC is safe in the sense that no one will dilute it with their political manipulations. Gold is perfect for jewelry and is used in the production of certain types of electronics. It is bulky and heavy. You can’t just buy a Cup of coffee for gold. Therefore, it is much easier to use bitcoin as a currency, ” Draper said.
Morgan Creek Digital partner Anthony Pompliano believes that under the circumstances, both assets have a chance of success.
“Gold and bitcoin have reliable monetary principles. The macroeconomic environment assumes that assets with similar characteristics will perform well on the way out of the current liquidity crisis. However, with all this, bitcoin has more volatility than gold, which makes it a more attractive asset. I expect bitcoin to surpass gold, ” Pompliano said.
Yet, unlike bitcoin, gold is a proven means of protection against monetary policy depreciation and inflation, especially when it comes to attracting traditional investors. But given the difficulties that have arisen due to the coronavirus pandemic (stopping mining and processing plants, closing delivery routes, etc.), access to the gold market is becoming limited. This is why many investors may start turning to alternative investment instruments.
“Bitcoin has all the properties to act as a store of value for those who do not have easy access to gold. For example, these are retail investors who will eventually look for alternatives, as their Fiat money will depreciate over time. This can probably lead to an increase in the value of bitcoin, but this will not happen immediately after the reward is halved. As in the case of gold, it will take time before quantitative easing and reducing the issue of bitcoin begin to have an effect,” said Quantum Economics analyst Jason Deane.