Thursday, May 19, 2022

If Gold And Cryptocurrency Don’t Have A Bright Future, What Else?

The President of the United States of America, Joe Biden, might release a budget proposal with an aim to spend $6 trillion in the 2022 fiscal year, reported New York Times.

As soon as the announcement hit the market, the value of Bitcoin, which was 7 percent high at a time and touched the mark of $40,000, suddenly collapsed around 2 percent. 

Since past weeks, the cryptocurrency market has been down, at times it does show some improvement but that does not mean it has recovered. The market may take a bit long time for that, till then the investors and traders would have to wait and buy the dip.

By the time investors were trying to cope up with this news, it was found that Gold also experienced a dip. The news spread like a fire in the jungle, and many individuals started claiming that economically ‘Neither Gold Nor Cryptocurrency Has A Bright Future,’ worldwide. However, they do not have any concrete evidence to substantiate their claim.

It is true that many people use gold as a material to make jewelry, but the fact can not be denied that it is an asset with various intrinsic qualities which make it unique. Those qualities are the reasons, at times it is considered as a safe haven and people invest in it.
Like Gold, the cryptos, too have their own qualities which makes them different. Although the digital assets are decentralized in nature, their features have helped them in gaining value in the market.
It is pointless to say that Gold and Cryptocurrency do not have a bright future, compared to fiat currencies or other commodities in the market they perform very well.

Why Gold and Cryptocurrency Are Better Investment Than Any Other Asset?

Since ancient times people have been holding gold for various reasons. Initially, it was society that placed value on gold. Gradually, the economy also got dependent on it. 

You may ask why individuals around the world hold gold? The answer is, due to its value and history. For thousands of years, Gold has been mixed into a different culture. In every era, this commodity was being used as a valuable asset. 

Before the introduction of paper-based currency, certain people used minted gold coins as a medium of exchange. 

Throughout the ages, this asset has been able to maintain its value among the people. Whether using it as jewelry, coins, or in any other form, the asset has been the safe haven for everyone.

Let’s understand what is a safe-haven asset?

An asset which has a negative correlation with any other asset, when the market collapses, is a safe-haven asset. 

In simpler terms, at the time of crises, these safe havens protect their investors. 

During crises, when most assets lose their value, safe-havens either retain it or experience growth in it. 

Compared to other assets, Gold always carries a value with itself. 

In recent times, when nothing is certain, Gold proved that it is a safe-haven. Unlike fiat currencies or other assets with credit risk, Gold could never be worthless in the market. 

The commodity might experience a slight dip every now and then but it would never disappoint its investors and traders. 

Not a financial advice but investing in gold like an investment for life, the commodity will always carry value. 

Similarly, Cryptocurrency, which is the newest form of exchange, is also one of the best options for investment. We say so because it provides certain opportunities to the traders with which they can earn solid returns. However, these profits come with a price, that is price volatility.

Cryptocurrencies are volatile in nature and many investors easily get scared off by this volatility. But many market experts believe that price volatility is good for an asset.

The CEO of MicroStrategy, Michael Saylor, while supporting volatility, stated, “I would much rather have a volatile 300% return than a non-volatile 15% return.”  

Crypto also offers a mechanism to investors so that they could expand their portfolio which is held in stocks, commodities and bonds.

Presently, its market is suffering a dip, which is a good sign for the future, but a few individuals think that the digital asset might not reach the point where it was a month. This claim is unreasonable. Every study has shown that whenever the market has gone down, it recovered with a huge profit margin in the future. 

In 2020, the cryptocurrency market crashed below $4000 but by the end of the year, it was able to reach $20,000. Following that, in April 2021, it reached an all-time high of $65000.

Apart from that, this commodity helped certain countries in regaining their economy at the time of crisis. Although its market was low in 2020, compared to fiat currencies, the performance of digital currency was appreciable.

Two Competitors With Better Future

Recently, as the market of both these assets came down, some of the people started claiming that they do not have any future, which is not true.

People who have been investing in these assets for a long time know that they both are valuable assets with their own features. 

Gold carrying a legacy of different cultures and cryptocurrency the future of the digital era, they both can’t lose their value. 

Though they both are competitors, these assets will have a remarkable future.

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