Financial encyclopedia

Can Bitcoin's record high replace gold?

Bitcoin (BTC) has risen above $72,000, a new high in more than 2 years once again set off a bitcoin boom. Since Federal Reserve Chairman Powell said that "Bitcoin could become an alternative to gold," the spot Bitcoin ETF was approved by the US Securities and Exchange Commission (SEC) and the increasing correlation between Bitcoin and gold, the market has also begun to compare bitcoin's substitution for gold in terms of safe-haven asset attributes.

How Bitcoin is linked to gold
It will increase significantly from 2021:28% before 2022 ️ 34% after 2022 ️ up to 47% in 2023. As the correlation between bitcoin and gold increases, it is further closer to the property of gold to some extent. However, there are still many differences which can be explored by the following points:

volatility
The measure of volatility is the Average True Range of Volatility (ATR), which describes how much the market has moved on average over a given period of time. In most cases, Bitcoin's volatility is much greater.

Stored procedure
As a physical asset, gold is kept in small amounts in vault bank safes and personal safes. On the other hand, Bitcoins cannot be stored in the traditional sense, but are stored in a secret number called a "private key" if you don't use a hardware or software wallet to protect your private key, buying bitcoins can be very dangerous.

Source of demand
In contrast to the 7,000-year history of gold as a tangible asset, the drivers of demand for Bitcoin are easy to identify, the current societal demand for Bitcoin is less well-defined and tends to revolve around price speculation buy-and-hold strategies and the underlying blockchain technology itself.

So far, the status of gold has remained unassailable, but some people have accepted Bitcoin, while others and central banks still embrace gold, which means the beginning of the coexistence era.