Finance experts reveal the difference between Bitcoin and Gold

Gold reached a new all-time high (ATH) last Friday, surpassing the $2,500 price per ounce, while Bitcoin (BTC) lags behind. The so-called “digital gold” divergence from the precious metal has sparked discussions in the finance community, evaluating their fundamental differences.

In particular, trader and analyst Kashyap Sriram, who has over eight years of experience in finance, shared his insight. Sriram first commented in a post by Lawrence McDonald, a New York Times best-selling author, who questioned Bitcoin’s store of value narrative, comparing BTC and gold price performances.

“Bitcoin’s best days are behind it. Gold’s best days are just beginning. This is the hard money rotation that libertarian crypto investors are going to miss.”

– Kashyap Sriram, answering Lawrence McDonald

The analyst then went further on the underlying difference between the two assets. Essentially, he explained that Satoshi Nakamoto modeled Bitcoin after gold, even using the word “mining” to describe BTC’s proof-of-work model.

In the previously mentioned post, Lawrence McDonald compared some historical price data from Bitcoin and gold. In particular, the finance expert highlighted gold’s worst drawdown of 21% against BTC’s drawdowns, which were as large as 82%.

Since 2021

Bitcoin

59k to 59k

Gold

1750 to 2500

*Last ten years – Gold’s largest drawdown? 21% vs. Bitcoin -82%, -58%, -65%, -75%.

*A store of wealth holds its value. It doesn’t lose half its value or more every few years.

— Lawrence McDonald (@Convertbond) August 17, 2024

As things develop, investors can decide to get financial exposure to Bitcoin, gold, or both – looking for an inflation hedge. Cryptocurrencies like BTC are inherently more volatile than solid commodities with industrial demand like gold, hence requiring caution.

Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.

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