For thousands of years, gold has been a storehouse of value. Investors have used gold as a hedge against inflation and recessions often caused by geopolitical tensions. Many investors are looking for alternatives to gold and precious metals in order to hedge against recent events like the COVID-19 pandemic, and the more recent military crisis between Russia, Ukraine. It is essential that we have alternatives to gold as we move towards a digital age. Bitcoin (BTC), which is a cryptocurrency that can challenge the dominance of gold, has been the shining star in this search.
An increase in gold prices is usually a sign of anxiety within traditional equity market. Investors currently agree that gold is overbought. As investors consider the economic and geopolitical implications of the Russia-Ukraine war, gold prices have risen to $2,000
Bitcoin and other cryptocurrency have seen an increase in capital funding during the same time period. Fundstrat, a research firm, estimated that venture capital buyers have invested $4 billion in the crypto market over the past three weeks. In the first week in March 2022, an additional $400 million was invested into crypto startups. Global investors seek more exposure to spaces that can withstand the effects of the Russia-Ukraine conflict. This is evident from the increase in funding.
Related: Fighting economic war with crypto’s dual-edged sword
Both sides have suffered economic losses as a result of the ongoing conflict. Many businesses have closed due to the military activities in Ukraine, which has had a negative impact on the local economy. Russia has been the subject of economic sanctions. These include restrictions on bank accounts, access to electronic payments and devaluation of local currency. Because Bitcoin is decentralized, there are no international laws that regulate it. This means that BTC has value regardless of where the holder is located. Bitcoin is legal in all countries. Some even declare it to be legal tender.
The potential impact that Bitcoin could have on the future has been demonstrated by the recent famines that led to people being forced from their homes. Bitcoin is much easier than transporting gold. Individuals wouldn’t need to declare Bitcoin when crossing international borders. They don’t have the responsibility of losing or being stolen.
Traditional investors are more attracted to Bitcoin’s utility in times of crisis because of its potential utility. Due to Bitcoin’s recent decline in value, this attraction has grown. Bitcoin has a major advantage over other cryptocurrency because it is well-known and has gained widespread acceptance.
Related: How to Lose All Your Bitcoin Investments
In times of crisis, stability
Many people were impressed by the resilience of Bitcoin to the effects of the conflict between Ukraine and Russia. Many traditional industries suffered economic losses worldwide as a result of the pandemic. Coinbase reported that they received $1.4 billion in fiat and cryptocurrency during the peak of the pandemic, which occurred March 2020.
Investors quickly saw that Bitcoin was able to retain its value despite the collapse of traditional stock markets. This led to an increase in capital pouring into the cryptocurrency that eventually reached an all-time high of $60,000 in March 2021. Bitcoin’s stability during this particular crisis has made it more attractive as a hedge option for people who are skeptical about gold’s future viability.
Despite recent growth in crypto markets, traditional market investments still have the edge in terms of value. We have seen this gap close at a faster pace than originally predicted, thanks to mainstream exposure to Bitcoin’s potential. Investors are always looking for the best options and most current information to enhance their portfolios.
Many investors are seeking diversification options because of the many advantages Bitcoin has over gold and the security of a digital future. Bitcoin seems to be the best choice. The incremental capital flow into crypto-space will end when the floodgates open. Bitcoin will be the new gold.
This article is not intended to provide investment advice. Every trade and investment involves risk. Readers should do their research before making any decision.
These views, thoughts, and opinions are solely the author’s and do not necessarily reflect the views or opinions of Cointelegraph.
Sheraz Ahmed, the managing partner at STORM Partners, is also the co-executive Director of the Crypto Valley Association. Sheraz Ahmed is an expert in innovation and has helped hundreds of companies implement modern practices to achieve their business goals. He is a leader in the global blockchain ecosystem, ensuring growth, collaboration, and integrity.