Key Points
- Since the US presidential election, Bitcoin has flourished while gold has struggled.
- Investors are expected to shift from gold to crypto assets, particularly Bitcoin, due to its higher yield.
Bitcoin has seen a significant rise since the US presidential election, while gold has faced challenges. This trend is anticipated to result in a notable shift towards crypto assets.
Gold and Bitcoin’s Performance
Gold, a leading investment asset and primary inflation hedge, fell to a one-month low of $2,543 on Nov. 14. This decline occurred shortly after the US Consumer Price Index report was released, showing an inflation rate of 2.6% in October as expected.
Despite a brief surge to $2,623, gold has still decreased by 2.6% over the past month.
In contrast, Bitcoin, often referred to as digital gold, reached an all-time high of over $93,400 just hours after the U.S. CPI data was released.
The Shift to Bitcoin
Maruf Yusupov, co-founder of the gold-backed stablecoin Deenar, anticipates a significant shift in the appeal of gold due to Donald Trump’s strong focus on taxes, tariffs, and crypto.
Yusupov suggests that despite gold’s long-standing relevance, the growing interest in Bitcoin could challenge gold’s dominance as an inflation hedge. This could lead to investors transferring funds from gold to Bitcoin, sparking a rapid rally for the latter.
The Federal Reserve’s potential to raise interest rates, a hawkish stance, could help to stabilize economic metrics according to Yusupov. However, this could also reduce the appeal of gold.
Yusupov further argues that investors seeking to diversify their capital might opt for Bitcoin due to its relatively higher yield. He also believes that a stronger U.S. dollar could pose a long-term threat to gold, as the need for gold or other hedges could become unnecessary.
On Nov. 17, Republican US Senator Cynthia Lummis suggested selling some of the Fed’s gold to accumulate Bitcoin as a national reserve. As of Q2 2024, the U.S. had 8,133 tons of gold reserves, according to data from Gold.org.
