Bitcoin vs. Gold: In the turmoil of the market, who can turn crisis into opportunity?

Every time the international market is in turmoil (such as the Brexit incident last week), people will choose to buy gold to preserve their value. This tradition has a long history. Whenever there is a big fluctuation in the market, people will turn to this globally recognized valuable item. Because the price of gold has always been relatively stable.

However, recently, more and more investors have begun to turn to Bitcoin, a web-based cryptocurrency, during market turmoil. In 2013, the Cyprus economy collapsed and the country even banned people from transferring assets abroad, and then Bitcoin began to enter the public eye. In the summer of 2015, the renminbi began to fall sharply, and some people began to buy gold, but more and more people chose Bitcoin.

The same thing happened last Friday after Brexit. While most markets and currencies were tanking, the price of Bitcoin rose by $100 in an instant. Bitcoin prices and trading volumes are rising. Coin Corner, an exchange that supports the exchange of British pounds for Bitcoin, saw a 20% increase in user registrations over the past month, said Molly Spiers, a spokeswoman.

As soon as the Brexit news came out, our website visits and registrations surged instantly, several times higher than usual.

Cryptocurrency expert Andreas Antonopoulos said:

Bitcoin has once again proved to the world that it has similar functions to gold, is sufficient to cope with crises, and is even more flexible and convenient than gold. Bitcoin prices are indeed somewhat unstable, but this volatility is different from other assets.

So how is Bitcoin different from gold? It depends on what kind of stability factor you want. Since the price of Bitcoin fell below $1,100 in 2013, it has never broken the record of that year, and most of the time it has been below $500. Although the price of gold also fluctuates, it has generally shown a stable upward trend.

Tocqueville Asset Management, an investment company, has been committed to gold trading for many years, but like many investment companies, it is still cautious about Bitcoin. Its senior investment analyst Ryan McIntyre said:

Compared to Bitcoin, gold has historically been a ‘safe island’ for investors and a currency of choice for people all over the world. It has helped people through multiple periods of economic turmoil.

As can be seen from the following two charts, even though the price of Bitcoin has been rising sharply, its instability has become more and more obvious. The direct connection between the price of Bitcoin and market turmoil factors has also become smaller and smaller (after the Brexit referendum, the price of Bitcoin did not rise all the way, but only maintained at around $640/BTC).