Bitcoin, better known as 21st Century’s Gold, recently hit the all time high at $41,900 earlier this month. There are more than 4,000 Cryptocurrencies at this time. Out of all of them, Bitcoin is the most popular Cryptocurrency. Financial institutions, Billionaires and the general public are pumping lots of money in it. Some people have even started to compare it with investment in Gold. As a matter of fact, there seems to be a strong correlation between Bitcoin and Gold.
Outflow from Gold has been noticeable in the past few months. On the other hand, Inflow into Bitcoin is also increasing with each passing day. As we can compare with the Price Charts of Gold and Bitcoin from the past 5 months, Gold has fallen from its lifetime high and Bitcoin is making new highs every day. JP Morgan further added fuel to that by saying that Bitcoin can reach $146,000 in the coming years. Obviously, when a Multinational Investment Bank makes such a statement, people are more likely to believe it without much thought.
Is the Psychology of Bitcoin Investing Different from Investing in Gold?
It has long been believed that investment in Gold, Share Market and Bitcoin has a strong connection with people’s psychology. Some experts say that investment is all about fear and greed- Fear of losing and Greed of earning money. It has happened many times in the past that before a major financial institution’s statement, a high volatility has been observed because of fear and greed.
But, that is not entirely the case for Bitcoin. It can be said without a doubt that Bitcoin and Cryptocurrencies in general, are more lucrative than Gold. You just need a smartphone and internet to buy or sell Bitcoin. Being an intangible currency, you also don’t have to carry Bitcoin with you. With the advent of technology, people’s preferences have now been tilted towards the Cryptocurrencies.
Millennials are driving the change.
The future for Bitcoin is directly dependent upon Millennials and our next generation. Most millennials prefer to invest in Bitcoin, as opposed to Gold. The first reason being the centralized control over Gold, which is not in the case of Bitcoin. Bitcoin is a Decentralized form of currency. For that reason, many governments are against Cryptocurrencies. They cannot put taxes on Bitcoin and thus cannot earn their profits.
Another reason that Millennials prefer Cryptocurrency is that it can be bought and sold using technology. The previous generation didn’t have access to technology, as people nowadays have. With Financial institutions failing now and then, the modern generation is less likely to trust them.
On the other hand, gold has always been believed to be a safe investment. Although many processes have to be performed to extract the gold that people prefer, it is still a tangible asset.
As much as we like to make investment simple with the simple click of a button, we can also not deny the fact that Bitcoin could be a bubble that can burst at any time. We advise any person who wants to invest in Bitcoin, that they approach it with caution and think about all the risks that come with it.
There is indeed a strong correlation between Bitcoin and Gold. To get more interesting news about Bitcoin, Subscribe to Our Newsletter.