Today, the US stock market is registering modest gains, with the Dow up only 0.5%, S&P 500 0.3%, and Nasdaq composite 0.8%. The Dow Jones Industrial Average is actually on track for its worst quarter since 1987 while the S&P 500 is heading for the worst quarter since 1938.
Bitcoin meanwhile is currently up 1.38% trading at $7,050 and looking to end the quarter at 10% losses.
Meanwhile, the price of oil is taking a beating after the refineries in Canada and South Africa shut down while producers prepare to flood the market. This oversupply has the Western Canada Select (WCS) crashing to $4 and in Texas, WTI Midland’ slipping below $7 a barrel.
This sharp decline in the oil prices was also recorded in the 2008 crisis. At the crest of that crisis, bitcoin was born. And now, “Petrodollar, the pillar of USD reserve status, seems fragile,” said PlanB.
Now, when it comes to the traditional safe haven asset, gold is trading at $1,625 per ounce up 1.5% since the COVID-19 pandemic hit the market. It is also up 5.7% YTD and 24% in the past year, as per Goldprice.org.
On the other hand, Bitcoin is down over 11% YTD and 34% since February 9 but up more than 50% in the past year.
Now, if we take a look at the timeline when both gold and bitcoin’s price was at $1,300 since then Bitcoin has spiked 392% while gold only increased by 23.5%.
And though Bitcoin’s volatility is way higher than the yellow metal, as popular analyst PlanB says, “No risk, no return.”
Gold, the precious metal that has decades behind it and a market cap of about $10 trillion is way ahead of bitcoin which has a history of mere one decade and is just getting started. However, Bitcoin’s S2F which is currently at 27 will double to 54 after May 2020 halving and catch up with Gold’s 58.
Based on scarcity, the stock or flow model defines, “utility as a savings vehicle.”
In the short term, analyst Mati Greenspan says there isn’t any reason for people to hold gold when “cash is clearly doing a better job of storing value.”
The real question however, he said is “with policies like QE Infinity, long term low interest rates, & helicopter money, what will hold its value better in five years?”
Now, gold has the highest S2F but the fourth halving in 2024, will see bitcoin’s shooting past that of bullion and going above 100 and “the higher SF, the higher market value.”