“Digital gold” or asset at risk: Bitcoin is soaring but the debate continues

However, he notes a use of bitcoin that resembles that of gold: in Iran, Venezuela or Turkey, in recent years, some Internet users have used cryptocurrency to protect themselves from the galloping inflation of their country.

The new bitcoin rush, which traded over $ 15,000 on Friday, the highest since a first peak more than two years ago, is reviving the debate on the nature of cryptocurrency: a “digital gold” or a active at risk?

Bitcoin, which has gained more than 30% in two and a half weeks and appears to be approaching its December 2017 high of nearly $ 20,000, began to take off on October 21, when online payments giant Paypal announced. launch a service to “buy, hold and sell cryptocurrency”.

“This is the validation of a market that was still relatively uncertain a few years ago,” says Simon Polrot, president of the Association for the development of digital assets.

When it was created in 2008 by Satoshi Nakamoto, Bitcoin presented itself as a peer-to-peer electronic cash system. It’s a alternative to traditional currencies, not regulated by a central bank and issued by a decentralized network.

A revolutionary process that has long put traditional finance and cryptocurrency back to back. According to Mr. Polrot, the arrival of more traditional players in the bitcoin market, such as Paypal but also Mastercard, are “very important signals” of new interest.

And industry players are not the only ones saying it: after Paypal’s announcement, analysts at the world’s largest investment bank, JPMorgan, are comparing bitcoin to gold very seriously.

“Bitcoin could compete with gold as an alternative currency in the coming years as a new generation of investors takes an ever larger share in the market,” they say.

They also point out that the capitalization in the cryptocurrency market is ten times lower than that of gold. What the specialized media immediately interpreted as a prediction of the growth potential of bitcoin when two years ago, Jamie Dimon, the CEO of the bank, had considered that bitcoin was a “scam”.

While JPMorgan estimates that it would take a few years for bitcoin to replace gold, the price of cryptocurrency jumped another 8.81% on Thursday, while at the same time gold climbed 2.45%, under the effect of the suspense surrounding the American elections. This brought back the comparison between the two assets.

  • Digital gold or start-up? –
    “Crypto could constitute a form of safe haven in a context where confidence in fiat money is a little undermined”, argues Mr. Polrot.

Like the yellow metal, bitcoin would therefore benefit from the very accommodating policy of the major central banks, which are stepping up efforts to counter the devastating effects of the pandemic, at the risk of reducing the attractiveness of their currencies.

However, some are equipping themselves with trading robots like those mentioned on www.ecommercecommission.com to take advantage of the still highly volatile and speculative nature of Bitcoin, and many traditional market observers refuse to broach the subject.

“Bitcoin has no place in a wallet of currencies”, slices a London broker who thus justifies not wanting to see his name mentioned in a paper on the subject: “in March, bitcoin lost nearly 25% of its value. For a currency asset manager, who uses gold to balance the rest of his investments, bitcoin would have a devastating effect. “

But for Charles M, whose company in cryptocurrencies, “bitcoin behaves like a tech company stock, the strongest correlation is with social media groups” like Facebook.

“It is an asset that is less directly correlated to the market. There are many, like art, wine … But the advantage of bitcoin compared to them is its liquidity,” he believes. -he.

However, he notes a use of bitcoin that resembles that of gold: in Iran, Venezuela or Turkey, in recent years, some Internet users have used cryptocurrency to protect themselves from the galloping inflation of their country.