Bitcoin’s rising popularity doesn’t endanger gold, Goldman Sachs Group said, adding that while the top cryptocurrency may be pinching some demand from the oldest of havens, the precious metal’s standing will endure.
“Gold’s recent underperformance versus real rates and the dollar has left some investors concerned that bitcoin is replacing gold as the inflation hedge of choice,” the bank said in a note seen by Bloomberg. “While there is some substitution occurring, we do not see bitcoin’s rising popularity as an existential threat to gold’s status as the currency of last resort.”
According to Goldman, institutions and wealthy investors avoid cryptocurrencies due to “transparency issues, while speculative retail investment causes bitcoin to act as an excessively risky asset.”
“We do not see evidence that bitcoin’s rally is cannibalizing gold’s bull market and believe the two can coexist,” it said.
On Thursday, bitcoin broke above $23,000 and has stayed close to that level since then. Analysts attributed the surge to increased demand from institutional investors, such as Paul Tudor Jones and Stanley Druckenmiller. Some of them say the digital currency’s rally is just getting started as demand will continue picking up.
Source: RT