Bitcoin and gold are not direct rivals, stresses Bank of America
The American financial giant comments on the status of BTC.
Bitcoin and gold are often seen as competitors in the category of long-term value-holding assets. Despite some similarities, they are essentially very different assets that do not correlate with each other, as stated by Bank of America analysts.
Bitcoin and gold are uncorrelated
Both cryptocurrencies (including primarily Bitcoin) and traditional gold can be a means of payment or an asset that stores value. However, there are some fundamental differences between them, as Bank of America analysts pointed out. These differences are so large and significant that BTC quotations and the gold exchange rate are largely uncorrelated.
– We agree that Bitcoin and gold have some objective similarities, but we also note fundamental differences and distinct characteristics. Bitcoin and gold prices follow very different trajectories. In fact, both are essentially uncorrelated. Bank of America analysts said.
The low correlation, or rather its lack in the case of comparing BTC and gold, is due to the fact that the factors affecting the prices of both assets are completely different.
– Gold is an asset related mainly to the macroeconomics, whose prices are determined by huge purchases by central banks around the world and flows generated by large investors, but also by changes in the real interest rate and the behavior of the US dollar. – commented experts from Bank of America.
As a result, Bitcoin and gold prices follow completely different trajectories. A quick glance at the prices of both of these assets over the past two years is enough to come to the same conclusion as us:
– Of course, it also follows that the reasons for owning Bitcoin or gold are different. While blockchain technology and its applications are rapidly evolving, Bitcoin's intrinsic value is hard to quantify, so prices are often driven by investor interest/upside momentum, which has also been noted in recent volatility, Bank of America analysts noted.
Representatives of the investment bank do not think that digital assets will push gold into oblivion. They also reject claims that Bitcoin and gold compete in the same category and are competitors to each other.
“For now, we believe Bitcoin is not a direct competitor to gold,” Bank of America analysts concluded.