Bitcoin hit an all-time high last week, and other cryptocurrencies have risen steadily over the last nine months. However, some crypto investors are looking to cash in on their investments, having made a significant profit, and put their money back into gold instead.
What is Bitcoin?
Bitcoin, and other similar crypto-currencies, are a technology-based ‘virtual’ digital currency which can be stored on computers or ‘digital wallets’.
The idea behind Bitcoin is to use a highly technically developed software code to authenticate transactions without having to use centralized banks or treasuries, and it is operated by a decentralised authority, unlike government-issued currencies. There are no physical bitcoins, only balances which are kept on a public ledger.
The Many Rises & Falls of Bitcoin
Major cryptocurrencies such as Bitcoin have experienced massive gains in recent months, rising steadily and hitting an all-time high last week. However, Bitcoin then crashed over the weekend by over $8,000.
The crypto market is notoriously volatile and is prone to sudden movements such as this. The last major bull run in late 2017 and early 2018, saw Bitcoin rise to around $20,000 and then fall to unprecedented lows. This uncertainty is driving many Bitcoin owners back to our old friend, the reliable - gold.
Are Bitcoin Investors Heading Back to Gold?
Due to Bitcoin’s highly volatile nature, many investors fear another large drop could soon be on the cards and have recently looked to use their crypto gains to put back into buying gold instead. During unprecedented times such as these, investors concerned by the possibly of the unsustainable price appreciation of Bitcoin look to sway from cryptocurrencies, and head back to solid investments such as precious metals.
So, why are Bitcoin investors heading back to gold? Unlike cryptocurrencies, gold is a physical asset – it is solid, it can be held, it is real. Gold does not depend on technology that can falter and has proven itself time & time again as a way to hedge against political chaos, wars, and inflation. We can almost guarantee that in a few hundred years down the line, gold will still be there as a store of value, as it has for thousands of years.
Bullion dealers have seen a definite uptick in investors looking to cash out on their cryptocurrencies, having made a profit, and deciding to put this into gold instead. Many UK investors are now cashing out their Bitcoin gains to purchase Gold Britannia coins or Sovereigns, as not only are they a proven safe haven asset, but they also have the benefit of being Capital Gains Tax exempt in the UK.
As always, however, investment decisions are your own, and we remind you to research your choices extensively. It is also a good idea to seek professional advice wherever possible. Gold vs Bitcoin? It’s completely up to you.
This blog represents one person’s opinion only. Customers should conduct their own research and take advice before making an investment. We do not offer investment advice.