The economy is not doing well, that much is certain. Inflation is skyrocketing and central banks are desperately trying to contain this ever-rising rate with tough measures. This has major effects on various markets. Both the crypto market and the stock market are going down considerably and there is even cautious talk of an inevitable recession at the moment. However, the price of gold remains quite stable. Perhaps that is why it is wise for crypto investors to take a look at the precious metals market.
Create an account with GoldRepublic and receive your first gram of gold for free.
Gold holds up
The past few years have been dominated by an extremely rapid growth of the crypto industry. The market capitalization of bitcoin (BTC) shot from just $60 billion in 2019 to a whopping $1.2 trillion in 2021! Due to this growth, the euphoria among investors was of course enormous and soon bitcoin was even compared to gold as the ultimate store of value†
Characteristic of a store of value, or store of value, is that it manages to survive during macroeconomically turbulent periods. Gold, which has been the store of choice for a majority of investors for hundreds if not thousands of years, holds its value in the event of a major stock market crash, for example.
That means gold is very interesting if hedge against economic hardship. An investor’s absolute priority during a bear market is to protect his or her assets. By investing in gold, the investor’s assets are, historically at least, quite safe.
Bitcoin as a store of value?
Although only a few months ago, when the price of bitcoin still hovered around the absolute peak of $69,000, bitcoin was hailed as the ultimate store of value as a replacement for gold, in practice this does not seem to be the case at all for the time being. In fact, rather the reverse is true; Bitcoin, on the other hand, shows that it remains an extremely risky investment.
The price of bitcoin reacts mostly negatively to news that inflation has risen once again and other macroeconomic or geopolitical malaise. In addition, the bitcoin price appears to be extremely closely correlated with the stock market. Those are not exactly characteristics of a good store of value.
The harsh reality is that at the moment the macroeconomic outlook is nothing to write home about. Combine that with the fact that bitcoin has not been able to live up to its status as a store of value in practice, and a bleak picture is painted for crypto maximalists. Gold still appears to be the best hedge against a recession for the foreseeable future.
GoldRepublic
GoldRepublic is a Dutch platform based in Amsterdam where you can buy and sell various precious metals. GoldRepublic was founded in 2008 by Marleen Evertsz and Kasper Luursema and meanwhile the company has grown into one of the largest platforms in the Netherlands where people can invest in precious metals such as gold and silver.
The actual possession of this gold is an important aspect when investing in precious metals with GoldRepublic. You invest physically in, for example, gold and in this way you get sovereign ownership. Crypto investors who consider it important to protect their assets in the current economic climate, would do well to consider investing in precious metals.
Create an account with GoldRepublic and receive your first gram of gold for free.
For more information about GoldRepublic and investing in gold, silver and platinum, please visit the GoldRepublic’s website† Also don’t hesitate to take a look at it Youtube Channel of GoldRepublic where precious metals specialist Bart Brands shares his insights and knowledge.
