Today’s article is going to try to answer the question: “is Bitcoin The New Gold?” and you might be convinced that it actually is after around a 5 min read from now!
New Analysis reveals that Bitcoin qualifies as one of the best long-term investments and is following Gold’s footsteps
Recent studies conducted reveal that Bitcoin holders are bound to make a profit after 1335 days (approximately three years and eight months) on average.
This is according to data released by BitcoinEconomics.io early this week. The studies also reveal that the lengths of the cycles below roughly correlate to reward halving events.
In the chart below, the timeframe between two peaks is indicated, as well as the time it would take for an investor to book profits if they purchased their Bitcoin during the peak of the previous cycle.
Bitcoin Profit Probability chart. Source: BitcoinEconomics.io
This, effectively, means that recouping 100% of the profit would take a maximum of three years and 8 months. This is related to the bullish run experienced at the end of 2013 when the price of Bitcoin hit the $1150 mark. If an investor purchased BTC at that price, which we can label the peak of that cycle, he or she would have waited until early 2017, when the price of Bitcoin would have broken that level once more.
Since this chart mainly focuses on the market extremes, not paying attention to the peak of that cycle would have led to the drastic reduction of the wait for the profit. If the investor had decided to hold BTC for 317 days, they would have had a 75% chance at making profits. If they had held the Bitcoin for 35 days, then they would have had a 60% chance to make a profit. The likelihood that the price of Bitcoin would be up any day stood at 50%.
Before you feel like that that is quite a long time to wait before getting your profits, then you will have a different perspective once you realize that stocks take an exponentially longer time. An investor would, for instance, have to hold their position for up to 23 years for them to get a guaranteed profit on the S&P 500. This is a clear indication that Bitcoin is safer and more reliable if you are looking forward to earning a profit from the long term storage of your asset.
The other thing to note is that this research paid keen interest on the chance of making the profit and not the scale of the profit that can be generated. Every time the prices of Bitcoin are on a bull run, the profits investors receive usually outdo those made by stocks investors by a very large margin. The Greyscale Bitcoin Investment Trust is one perfect proof of this allegation. The revenue earned through this trust outperformed every other asset held by the company in 2019. The appreciation of the value of the Bitcoin trust is at a solid 30% presently.
Gold has also managed to maintain its excellent track record of performance as a favorite asset amongst many investors. This week has seen the bullish trends continue, and this has sparked up conversations amongst the top investors who have been keen on highlighting the importance of investing in precious metals. You might have seen Mark Mobius’ interview on CNBC earlier this week. The Mobius Capital Partners’ founding partner recommended that investors should consider having not less than 10% of physical gold in their portfolios.
Analysts have predicted that the price of gold will shoot past the $1600 mark by the end of 2019. As the global economic scene continues to experience unprecedented shake-ups, physical gold comes up as a very solid asset, based on its consistent bullish trends.
Investors’ resolve undeterred despite the clear warning signals given in the stock market.
Very early on in the week, there was a clear warning signal that the stock market was turned upside down. Stocks that have low multiples as well as stable fundamentals, or simply value stocks as they are commonly referred to as were realized to have outdone all their growth counterparts. Such a shift is one that should cause sufficient alarm amongst investors owing to the fact that momentum stocks have outperformed all value names in all the recent years. A downturn would be realized in the broader market if there was any rotation away from such stocks.
Over the past half-decade, momentum stocks have outperformed all their value counterparts. Performance charts on the S&P 500 reveal that growth names are the best-performing stocks currently. According to FactSet data, 70% of the top ten best-performing stocks have a higher valuation in comparison to the broader index. This includes top performers such as MarketAxess Holdings and Chipotle Mexican Grill stocks.
The trading session on Monday was totally opposite from what traders have experienced all through the year, however. This, in conjunction with uncertainties in the geopolitical scene, has cast a dark shadow on the stock markets for the oncoming months.
Top Investors recommend gold as the most suitable investment choice
As already highlighted, Mark Mobius asserted that every investor should have not less than 10% of physical gold in their portfolio. According to Mobius, physical gold is a perfect asset to invest in, owing to a very steady increase in the supply of money.
He further stated that with all central banks trying to lower the interest rates and to pump more money into the system, as well as the increment of the number of cryptocurrencies in circulation, then it is hard for one to determine how much currency there is in the world.
This is the reason why insisted that investors should hold not less than 10% of physical gold in their portfolios, and have the rest of their money placed inequities that yield dividends. This will hold if the dollar continues to get weaker.
Mark predicted that as currencies lose value, people will gradually begin to realize the importance of having gold.
One thing about gold is that it retains its value way better than all other currencies, and it is a safer haven when the market is experiencing volatilities. When the dollar is weak, the prices of gold tend to receive a boost. This is mainly because the global gold trade is usually denominated in USA dollars.
Mark Mobius highlighted the fact that gold is a means of exchange and a more stable one for that matter.
There is no better time than this to take advantage of the rise in gold prices and to hedge yourself against volatilities in the stock markets. All indicators show that the bullish trends in gold prices are bound to continue, and this sets a perfect opportunity for you to realize immediate growth and to protect your portfolio against any economic downturns in the future. You should act promptly, as this will guarantee the reception of benefits.
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I hope you found this short article on if Bitcoin is the new gold to be helpful and that you now have a better understanding if it really is true. Please share your thoughts and questions below as I will be more than happy to answer them!
I wish you success!
founder of Gold Retired