There is a growing interest in comparing the current Bitcoin price to the value of gold. While both assets share some correlations, one clearly performs better than the other. Today, one BTC buys you 22.5 ounces of gold, a value that has never been reached before.
Bitcoin Still Outperforms Gold
There was a time when one would be inclined to sell Bitcoin in favor of gold. Diversifying an investment portfolio is always worthwhile, assuming one wants to take fewer risks with these markets. However, according to these statistics, investing in bullion over the world’s leading cryptocurrency is no longer a viable approach.
In comparison, the Bitcoin-to-gold ratio heavily favors cryptocurrency. One can purchase 22.5 ounces of bullion with 1 BTC, a value that no one expected to see this early in 2021. Gold had a good run in 2020 but ultimately ran out of steam, which is why the price is still drifting lower every week.
Bitcoin, on the other hand, continues to rise higher and higher. It has now surpassed $40,000 per BTC for the second time this year. Maintaining a value above this price level is a tough task, as the market remains incredibly volatile. However, there are more reasons to own Bitcoin than gold right now, despite both benefiting from the same macroeconomic circumstances.
As the ratio between Bitcoin and gold continues to evolve, the battle lines are clear for everyone to see. Whereas some analysts claimed these markets share a similar sentiment, their yearly performance depicts something else entirely. Seeing bullion hit $40,000 per ounce is nigh impossible, but for Bitcoin, this level may be a mere stepping stone.
Gold Drops Over 5% In The Past Month
Looking at the gold price statistics, the decline is tangible. A 5.28% decrease in value is not abnormal in the cryptocurrency world. However, for precious metals, it is usually a sign of the bull market coming to a permanent halt. Assuming that is the case, the price may drop below $1,700 in the weeks to come.
What is perhaps more important is what the Bitcoin-to-gold ratio can achieve. Surpassing 22.5 ounces for the first time is an incredibly bullish metric for cryptocurrency enthusiasts. Assuming the price floor for Bitcoin is in the six-digit range, this ratio can hit a ratio of 60 or more in the years to come.
A reversal of this correlation seems incredibly unlikely at this time. Since 2019, the chart has flipped bullish in favor of Bitcoin without missing a beat. If this trend continues, the coming years will prove very entertaining and exciting. It all comes down to how well Bitcoin can perform in comparison to gold and other precious metals.
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