Can increase in Gold's volatility benefit bitcoin ?

[pawanjain]

Bitcoin has a huge volatility when compared to any other asset.
Gold on the other hand has less volatility than bitcoin and is often the investors choice for investments.
These days the price of gold is increasing rapidly causing a bigger volatility than it earlier had.
So do you think that if the volatility rate of gold matches with that of bitcoin then bitcoin will become a huge competitor to gold.
Well it is already a competitor but I think many investors will dive in to buy bitcoin as it would be better than gold.

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[pakhitheboss]

Gold is the only commodity that has been traded since ancient times. I did a google search and found the below information.

560 BC, the Greek state of Lydia in Asia Minor introduced the first gold coins.

Therefore comparing Gold with Bitcoin is not correct. Globally Gold is still considered today as the most stable form of Investment. A slight volatility will not make a huge difference.

Bitcoin is an emerging Investment and a payment processing system that is only used on the Internet. Gold on the other hand can be traded on the Internet and also physically.

Hence, Bitcoin has a long way to go.

[TheUltraElite]

Bitcoin has a huge volatility when compared to any other asset.

Volatility of bitcoin is variable. Although it is true for any speculative asset class, for the last 2years bitcoin has shown more stability than volatility. But the full length analysis of bitcoin price gives the idea that it is a volatile.

Gold on the other hand has less volatility than bitcoin and is often the investors choice for investments.

No, gold is also pretty volatile. It is a choice because of it having liquidity in any part of the world and the fact that it is not easily tarnished.

These days the price of gold is increasing rapidly causing a bigger volatility than it earlier had.

You dont measure volatility by whether price is rising or lowering. You measure it by observing trends from several years taken together.

So do you think that if the volatility rate of gold matches with that of bitcoin then bitcoin will become a huge competitor to gold.

It is a personal choice of investors. The economic share of bitcoin compared to other asset classes is still very low to give any competition to any sector for that matter.

Well it is already a competitor but I think many investors will dive in to buy bitcoin as it would be better than gold.

Both have their own pros and cons. Neither of them is good or bad. In my opinion, it is important to have several asset classes to have put money in. That does not mean that you should put money in altcoins.

Considering crypto as one sector - bitcoin should be the only investment there to get a low-risk portfolio share there.
Keeping precious metals as another sector - gold, silver are the go to metals. There are shitmetals out there too.
Third would be stocks and bonds.

In this manner one should diversify to have risk management done.

[akram143]

But if you look at the bitcoin's price chat of all time we can find ups and huge downs as well but with gold it may not be possible so we can't consider Gold as really volatile the value of Gold is increasing and it may never return back to the previous prices but with bitcoin its still unpredictable that is why we call bitcoin as volatile asset.

[webtricks]

But if you look at the bitcoin's price chat of all time we can find ups and huge downs as well but with gold it may not be possible so we can't consider Gold as really volatile the value of Gold is increasing and it may never return back to the previous prices but with bitcoin its still unpredictable that is why we call bitcoin as volatile asset.

Not Really! Gold price has cyclic movement too. Although, it is currently trading at all-time-high (ATH) but before 3rd August, the previous ATH for gold was on 25th July, 2011. Since then gold was regularly trading below $1800/oz and it took 9 years to finally break the previous ATH.

On the other hand, story is almost similar for bitcoin too. It hit ATH on 19th December, 2017. Since then, it is trading below $19000/BTC levels.

If we look on the long term charts, gold and bitcoin nearly perform with same volatility (although their movements don't coincide with other).

Bitcoin has a huge volatility when compared to any other asset.
Gold on the other hand has less volatility than bitcoin and is often the investors choice for investments.
These days the price of gold is increasing rapidly causing a bigger volatility than it earlier had.
So do you think that if the volatility rate of gold matches with that of bitcoin then bitcoin will become a huge competitor to gold.
Well it is already a competitor but I think many investors will dive in to buy bitcoin as it would be better than gold.

Gold investors look for high returns too. From investors' point-of-view, high volatility is preferable. So high volatility in gold price these days won't act as deteriorating factor for gold market. Rather it will induce people to invest in gold more because there is high chance of making profits. Don't forget, you can even short securities these days. So dip is good for investors too.

For next one year, I am optimistic for both gold as well as bitcoin and increased the percentage of both in my portfolio. Currently around 78% of my portfolio comprises of bitcoin and gold. As a matter of fact, I invest in gold via GOLD STABLECOIN. This ERC-20 coin is 100% backed by gold and it is possible to buy it with btc/eth.

PS: @OP, did you ask this question from the point of view of Indian market? Otherwise, I don't see any reason why you posted this thread in 'India' section instead of 'Economics' section.

[pawanjain]

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PS: @OP, did you ask this question from the point of view of Indian market? Otherwise, I don't see any reason why you posted this thread in 'India' section instead of 'Economics' section.

No such reasons though. I just wanted to know us Indians look at cryptocurrency when compared to Gold.
Found some good views on both of them.
Sometimes I just post in India board just to engage in discussion with my Indian Crypto fellow mates.  

[TheUltraElite]

PS: @OP, did you ask this question from the point of view of Indian market? Otherwise, I don't see any reason why you posted this thread in 'India' section instead of 'Economics' section.

I guess it is fine to post some topics of generic interest in this local board. Because the number of new topics here are pretty low and the discussion is also very small. It helps get some new posts and generate some activity here which is the only way to get some merit distribution done.

I mean I feel bad seeing users younger (in terms of forum years) come here and already have reached legendary worth merits while many others still stuck. Their local boards are getting very high degree of merit cycling. #feelsbadman

[allahabadi]

But if you look at the bitcoin's price chat of all time we can find ups and huge downs as well but with gold it may not be possible so we can't consider Gold as really volatile the value of Gold is increasing and it may never return back to the previous prices but with bitcoin its still unpredictable that is why we call bitcoin as volatile asset.

~
Not Really! Gold price has cyclic movement too. Although, it is currently trading at all-time-high (ATH) but before 3rd August, the previous ATH for gold was on 25th July, 2011. Since then gold was regularly trading below $1800/oz and it took 9 years to finally break the previous ATH.
~

Any or every commodity that has a decent unvariable inflation rate; has cyclic movement and its inevitable; but what needs to be kept in mind is the fact if it is oversold or not?

A VERY WELL developed market like tht of gold shudn't be compared to BTC markets which r still in nascent stage.

P.S. For ppl overthinking volatility; remember one of the most sought after commodities i.e. petroleum closed in negative on quarterly physical markets in USA and Canada (2 of the largest consumers).

[Heisenberg_Hunter]

Pardon me, but I still firmly consider bitcoin as a mode of payment/global currency rather than calling that as a form of investment/digital gold. I might be proven wrong in a couple of years or I might be proven correct if the adoption of bitcoin as a currency increases at a larger rate. The adoption rate of bitcoin as a currency is influenced by two major factors :

• The scalability/privacy of bitcoin which can be achieved through protocol developments such as Schnorr signatures or Taproot
• The adoption by the global population.

Today at the current adoption rate, it's not really possible to scale without the adoption from the public to consider it as a currency. How much of us are trying to spend bitcoin for a service as it is in the original form without converting them to INR? It's very less because, the services or owners of the products are not willing to accept bitcoin as a form of currency and many of them are not even aware of such a currency exists.


In developed countries like Australia or USA, bitcoin is being used both as a mode of currency and as an asset class. But here, scam artists are using bitcoin and cryptocurrencies as a way to scam poor newbies and nothing more than that. Creating more and more crypto exchanges around India will never increase the adoption as a currency but rather it will make them as a trading asset class. On the other hand, if we have dedicated research labs set up to scale/develop the protocol that will indeed pave way for better innovation as well as freedom from Congress and BJP governments. On top of that, I also completely agree with what @TheUltraElite and @webtricks said about the gold investments.

Let me ask you a question, what is the purpose of bitcoin if they are being used as a asset class? Do you wear them and show off as we do with gold ornaments? Have you invested in any company for them to rise in popularity and there by get returns? As of now (~10 years) we are using bitcoin as a speculative investment to get rich and this will probably limit us towards a newbie mindset towards bitcoin!

Do we really need freedom from banks (controlled by governments) or are we going to continue investing in a currency speculating that it might reach the moon some day?

[teosanru]

Pardon me, but I still firmly consider bitcoin as a mode of payment/global currency rather than calling that as a form of investment/digital gold. I might be proven wrong in a couple of years or I might be proven correct if the adoption of bitcoin as a currency increases at a larger rate. The adoption rate of bitcoin as a currency is influenced by two major factors :

• The scalability/privacy of bitcoin which can be achieved through protocol developments such as Schnorr signatures or Taproot
• The adoption by the global population.

Today at the current adoption rate, it's not really possible to scale without the adoption from the public to consider it as a currency. How much of us are trying to spend bitcoin for a service as it is in the original form without converting them to INR? It's very less because, the services or owners of the products are not willing to accept bitcoin as a form of currency and many of them are not even aware of such a currency exists.


In developed countries like Australia or USA, bitcoin is being used both as a mode of currency and as an asset class. But here, scam artists are using bitcoin and cryptocurrencies as a way to scam poor newbies and nothing more than that. Creating more and more crypto exchanges around India will never increase the adoption as a currency but rather it will make them as a trading asset class. On the other hand, if we have dedicated research labs set up to scale/develop the protocol that will indeed pave way for better innovation as well as freedom from Congress and BJP governments. On top of that, I also completely agree with what @TheUltraElite and @webtricks said about the gold investments.

Let me ask you a question, what is the purpose of bitcoin if they are being used as a asset class? Do you wear them and show off as we do with gold ornaments? Have you invested in any company for them to rise in popularity and there by get returns? As of now (~10 years) we are using bitcoin as a speculative investment to get rich and this will probably limit us towards a newbie mindset towards bitcoin!

Do we really need freedom from banks (controlled by governments) or are we going to continue investing in a currency speculating that it might reach the moon some day?

Excellent point. This is what I have been telling everybody. Bitcoin is atleast in it's natural form a currency. It can be called an asset but there are different class of assets. When we talk about currency as a class of assets it's value will depend upon two factors one is the adoption of that currency and the second thing is the Purchasing Power Parity it has in the country it is used in terms of other currencies. The latter not being applicable to bitcoin so the whole value is derived merely from the wider adoption of currency and nothing else. So it's value would rise as an asset only if people use it more as a currency.

Consider it this way. How many people from India buy US dollar as a long term investment? ZERO. You know why? Because our RBI prohibits that and so does generally every central bank. But you know why do they prohibit that? Because people would start buying USD considering that it's value always rises and slowly you will USD actually rising exponentially due to the speculative value it gets. Yes people can trade in Forex that is allowed because short term trades in futures don't cast a great impact on values.

Alternatively, Crude prices have given us a great example that if there is no utility of something you can see the price of that commodity going to rock bottom. So this asset class mentality for Bitcoin in longer term will be destructive for bitcoin. It cannot become another gold.

[erikalui]

Gold is a saving and investment while bitcoins are like stock market that can crash at anytime and turn your investment into zero. People earlier and now invest and save gold to use during tough times like earlier when countries were under attack and there was a war-like situation, people used to only take away gold as their own fiat currency used to drop to zero. Comparing bitcoin's volatility to gold is not right as even though both can be sold or bought with any currency, you can just go to any offline store and exchange gold but it's not the case with bitcoins which are not available offline. Being limited to an online currency is for me, the most disadvantageous thing about bitcoins. It's easy to hack and a common target for hackers and scammers.

[TigerMart]

I think, it is too early to compare an asset with thousand years history with an asset with a ~12 years of history. These two markets are different altogether and finding co-relation is probably much of an exaggeration, in my honest opinion.

[allahabadi]

Gold is a saving and investment while bitcoins are like stock market that can crash at anytime and turn your investment into zero. People earlier and now invest and save gold to use during tough times like earlier when countries were under attack and there was a war-like situation, people used to only take away gold as their own fiat currency used to drop to zero. Comparing bitcoin's volatility to gold is not right as even though both can be sold or bought with any currency, you can just go to any offline store and exchange gold but it's not the case with bitcoins which are not available offline. Being limited to an online currency is for me, the most disadvantageous thing about bitcoins. It's easy to hack and a common target for hackers and scammers.

To claim that BTC will drive to Zero is an overkill,  but I think gold give more confidence however an interesting observation has come up.
https://www.bloomberg.com/news/articles/2020-08-05/older-investors-go-for-gold-younger-ones-bitcoin-jpmorgan-says

[TheUltraElite]

To claim that BTC will drive to Zero is an overkill,  but I think gold give more confidence however an interesting observation has come up.
https://www.bloomberg.com/news/articles/2020-08-05/older-investors-go-for-gold-younger-ones-bitcoin-jpmorgan-says

These are biased statements which have been debunked long back. It is their personal choice to invest and I can see a lot of the older generation who are almost ready to enter the three digit age figure willing to take part in ICOs and thus get scammed of their money. Majority of ICO telegram groups are filled with them and the number of younger users there is again comparable.

You have to understand that human beings have to work to get a living and thus the concept of investing comes to them at a lot older age when they sit down to look back at their life. So eventually the newer methods of keeping money is shown to them and thus they take part in them, not knowing to apply discretion.

JPM has his own propaganda as well. They are investing in bitcoin too. Bottomline is that you cannot trust the words of any human when it comes to investment. You have to trust yourself.

[allahabadi]

To claim that BTC will drive to Zero is an overkill,  but I think gold give more confidence however an interesting observation has come up.
https://www.bloomberg.com/news/articles/2020-08-05/older-investors-go-for-gold-younger-ones-bitcoin-jpmorgan-says

These are biased statements which have been debunked long back. It is their personal choice to invest and I can see a lot of the older generation who are almost ready to enter the three digit age figure willing to take part in ICOs and thus get scammed of their money. Majority of ICO telegram groups are filled with them and the number of younger users there is again comparable.

You have to understand that human beings have to work to get a living and thus the concept of investing comes to them at a lot older age when they sit down to look back at their life. So eventually the newer methods of keeping money is shown to them and thus they take part in them, not knowing to apply discretion.

JPM has his own propaganda as well. They are investing in bitcoin too. Bottomline is that you cannot trust the words of any human when it comes to investment. You have to trust yourself.

Ofc it is personal choice; but even then I belive there is a correlation to age, wud love to see some data or research that debunks it.

Also I agree with you that everyone has an agenda and one shud apply his own mind when investing.

[amishmanish]

--snip--
Let me ask you a question, what is the purpose of bitcoin if they are being used as a asset class? Do you wear them and show off as we do with gold ornaments? Have you invested in any company for them to rise in popularity and there by get returns? As of now (~10 years) we are using bitcoin as a speculative investment to get rich and this will probably limit us towards a newbie mindset towards bitcoin!

Do we really need freedom from banks (controlled by governments) or are we going to continue investing in a currency speculating that it might reach the moon some day?

Great points. I think whether we like it or not, Bitcoin will follow the same trajectory of adoption and popularity that everything else related to technology and culture in our country does. We will wait for bitcoin to play out in the international arena and once it gains enough popularity, we will provide a market for it. It will still always remain an "investment" to the common public. DeFi is the latest trends and quite a few India-based developers and startups are finding foothold in this market. They will continue to contribute at the back-end and if and when these things actually turn out to be useful, you'll start to see scammy-Indian spinoffs.

We in India are pretty far away from needing/ asking for freedom from banks or the government. We do not have an innovation culture where people with such ideas also have the dough. We are a traditionalist society that gives power in the hands of its "elders", be they politicians or business. This restricts us to conforming to existing institutions and playing by the rules.

Again, comparing gold and bitcoin for common public is not useful. Gold is god around here. Every family has some sort of stash that only the elders will probably know about. It is devotedly kept as a sort of family legacy and keeps growing with marriages and family functions. We have a profound, almost mythical relation with Gold. The news about the Royal family of Travancore and their fight for the Padmanabhaswamy temple is a great example of this. Bitcoin will never match that level of devotion. Yet, if people realize that it is even "remotely similar" to Gold, you can imagine the demand.

[allahabadi]

We in India are pretty far away from needing/ asking for freedom from banks or the government. We do not have an innovation culture where people with such ideas also have the dough. We are a traditionalist society that gives power in the hands of its "elders", be they politicians or business. This restricts us to conforming to existing institutions and playing by the rules.

Very well articulated and that will take some time as Tonnies said Gemeinschaft(Community) turns to Gesellschaft(Associational society) gradually.
It takes it own time.

Again, comparing gold and bitcoin for common public is not useful. Gold is god around here. Every family has some sort of stash that only the elders will probably know about. It is devotedly kept as a sort of family legacy and keeps growing with marriages and family functions. We have a profound, almost mythical relation with Gold. The news about the Royal family of Travancore and their fight for the Padmanabhaswamy temple is a great example of this. Bitcoin will never match that level of devotion. Yet, if people realize that it is even "remotely similar" to Gold, you can imagine the demand.

Bitcoin shudn't match tht level of devotion; simply for the reason tht it aims to free society of such strappings of irrational traditionalism. It aims to give freedom from such mentality and not replace it. So, BTC will gradually percolate with the coming of Age of Reason.