© Reuters. Bitcoin volatility will drive investors back to gold, says Evolution Mining CEO
According to Jake Klein, the executive chairman and CEO of gold mining company Evolution Mining, the volatile nature of gold would make it a preferable investment instrument once again. He argued that cryptocurrency lags behind the precious metal in terms of “longevity and security.”
Bitcoin or Gold?
In a recent interview with CNBC, Jake Klein shared his views on the correlation between virtual currencies and gold. He opined that many cryptocurrency investors would eventually change their strategies because of the volatility of digital asset prices, in particular. With that said, they would go back to gold:
“I think the volatility of cryptocurrencies will drive people back to gold.”
It is important to note that volatility in the cryptocurrency market is nothing new. For example, since early 2021, the BTC has increased its dollar value from $29,000 to an all-time high of nearly $65,000 in mid-April.
However, this has not been an obstacle for many investors, companies and institutions to choose the main digital asset as an investment solution. Bitcoin adoption even reached a national level when El Salvador declared it legal tender within its borders.
Despite preferring gold, Klein surmised that BTC and the yellow metal could coexist in the future. To serve as an adequate store of value, cryptocurrency must demonstrate the “longevity and security” that the precious metal has proven over the past 70 years.
Gold has, in fact, been a safe haven resource of choice for centuries. It definitely prevailed and served as a stable financial instrument throughout much of human history.
At the same time, BTC also has its benefits. Cryptocurrency trading and storage is accessible and does not require intermediaries such as banks. Mark Cuban further supported this and recently referred to the digital asset as a “financial religion”.
Separately, Cuban co-host at Shark Tank Kevin O’Leary recently said institutional investors don’t fear the BTC’s infamous volatility. In an interview, he argued that “they want to play”.
The price of gold could suffer from the rise of the BTC
Late last year, the American multinational investment bank JPMorgan said institutional investors had initiated a transfer of wealth from gold to Bitcoin. Following the process, BTC would take the lion’s share of the precious metal’s market share.
JPMorgan (NYSE:) (SA:) Executive Director Nikolaos Panigirtzoglou believes the trend has already started to change. The change may negatively impact the price of gold in the long term:
“The adoption of Bitcoin by institutional investors has just begun, while for gold its adoption by institutional investors is very advanced. If this medium and long-term thesis proves to be correct, the price of gold will undergo a structural reversal in the coming years.”
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