According to Jake Klein – the executive chairman and CEO of the gold mining firm Evolution Mining – bitcoin’s volatile nature would make gold a preferable investment instrument once again. He argued that the primary cryptocurrency falls behind the precious metal in terms of “longevity and security.”
The Question of Our Times – BTC or Gold?
In a recent interview for CNBC, the chief executive officer at Evolution Mining – Jake Klein – shared his views on the correlation between virtual currencies and gold. He opined that many crypto investors would eventually change their strategies because of the price volatility of the digital assets, bitcoin in particular. With that said, they would return to gold:
“I think that the volatility in the crypto space is going to ultimately lead to people coming back to gold.”
It is worth noting that the volatility in the cryptocurrency market is not something new. For example, since the beginning of 2021, BTC has been stretching its USD value from as low as $29,000 to an all-time high of nearly $65,000 in mid-April.
However, this has not been an obstacle for many investors, companies, and institutions to choose the primary digital asset as an investment solution. Bitcoin adoption even reached a national level when El Salvador declared it as a legal tender inside its borders.
Despite giving his preference to gold, Klein surmised that BTC and the yellow metal could co-exist alongside in the future. To serve as a proper store of value, the primary cryptocurrency has to demonstrate the “longevity and security” that the precious metal has proved over the last 70 years.
Gold has indeed been a safe-haven asset of choice for centuries. It definitely prevailed and served as a stable financial instrument throughout a big part of human history.
At the same time, BTC also has its benefits. Trading and storing the cryptocurrency is accessible and does not require intermediaries like banks. Mark Cuban further supported this and recently referred to the digital asset as a “financial religion.”
Separately, Cuban’s co-host on Shark Tank, Kevin O’Leary, recently said institutional investors are not afraid of the infamous BTC volatility. In the interview with CryptoPotato, he argued that “they want to play.”
Gold’s Price Could Suffer from BTC’s Rise
At the end of last year, the American multinational investment bank – JPMorgan – stated that institutional investors had started a wealth transfer from gold to bitcoin. Following the process, BTC would take a major portion of the precious metal’s market share.
JPMorgan’s Managing Director – Nikolaos Panigirtzoglou – believes that the trend has already started to change. The shift could impact gold’s price negatively in the long-term:
“The adoption of bitcoin by institutional investors has only begun, while for gold, its adoption by institutional investors is very advanced. If this medium to longer-term thesis proves right, the price of gold would suffer from a structural headwind over the coming years.”