Recent instability of the currency market has led to a sharp increase in gold prices. At the same time, Bitcoin that was regarded as one of the main safe-haven assets demonstrated much lesser growth in price. Such situation made investors turn to old trustworthy gold again.
Amidst much uncertainty caused by Donald Trump’s threats of missile strikes on Syria, the gold price has reached its two-year peak this week hitting $1369.4 per ounce. Last time it hit this threshold in August 2016. Meanwhile, bitcoin grew back to $8 000 level too, but this only allowed it to recover from the losses suffered since the end of last month. All this makes many experts believe that bitcoin, at least for now, is being replaced by gold in the list of top safe-haven assets.
“I’m betting on gold now. Gold is taking the title of the key defensive asset from bitcoin because bitcoin has lost too much of value in last two months,” – the Managing Director of FX Strategy for BK Asset Management Boris Shlossberg said on CNBC.
Long-run credibility of Bitcoin suffers not only from the recent price downfall. Bitcoin mining boom has much to do with it as well because it pumps up the mining cost. The predictions that by 2020 Bitcoin network will consume the same amount of electricity as all other electric power consumers in the world taken together, given the current mining scale increase rate sustains.
Last year, some forecasts were voiced that at the current rate of growth of mining, by 2020, it will consume the same amount of electricity as it is currently consumed all over the world.
John Hough, the observer at Market Mogul, named the insufficient number of qualified dealers and traders in the field of cryptocurrency trading as one of the major negative factors too.
“Strengthening of state regulation, decline in liquidity, high volatility and growing electricity costs keep on reducing the Bitcoin’s potential,” – he concluded.