Bitcoin (BTC) is approaching all-time highs while gold falls below $1,700

As the price of #Bitcoin# (BTC) approaches $59,000, its value relative to gold is close to all-time highs, which may hint at the emergence of a new preferred store of value.

Bitcoin

Measured against gold, the price of Bitcoin reached 34.94 ounces on Tuesday. BTC’s comparison to gold peaked at 35.35 ounces on March 13 as Bitcoin surged above $61,000.

Bitcoin’s value relative to gold has more than doubled in the past three months and has increased nearly sevenfold since October 2020.

Meanwhile, gold futures on the Comex division of the New York Mercantile Exchange fell below $1,700 per troy ounce on Tuesday. Prices hit a three-week low of $1,676.50. Gold prices have corrected nearly 18% since peaking at $2,050 per ounce in August 2020.

2020 was a big year for gold as it hit all-time highs in every major currency before breaking below $2,000 against the U.S. dollar for the first time. By the end of the year, the bullion was up about 22%. Still, that pales in comparison to Bitcoin’s 265% annual return.

With the recent $1.9 stimulus package fueling inflation fears, assets like gold and Bitcoin should theoretically perform well as investors hedge bets against a falling dollar. However, the recent rise in bond yields may have taken some of the sheen away from gold.

Others, even some prominent analysts like Bloomberg’s Mke McGlone, believe that gold is losing ground to Bitcoin in the safe-haven battle. Earlier this month, McGlone tweeted:

“Gold will always have a place in jewelry and coin collections, but most indicators suggest that Bitcoin is accelerating in its efforts to replace the metal as a store of value in investors’ portfolios.”

Even JPMorgan, a long-time Bitcoin critic, claims that the digital currency will eat into gold’s market share. “Institutional investors are beginning to adopt Bitcoin, while gold is very advanced in terms of institutional adoption,” JPMorgan strategists led by Nikolas Panigirtzoglou said in their December 2020 report. “If this medium- to long-term view proves correct, gold prices will face structural headwinds in the coming years.”

Bitcoin’s digital gold narrative continues to strengthen with the halving. The deflationary event, which happens every four years in May 2020, reduces the number of new Bitcoins that enter circulation after each block is mined.