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A lot of volatility in cryptocurrency price movements, insufficient security, and excessive scams have failed cryptocurrencies to become an ideal investment vehicle for investors; and, in fact, driving them away towards traditional commodities such as gold.
The most popular cryptocurrency, Bitcoin, has wiped out more than 80% of its gain in just a year after touching its peak of the all-time high of about $20,000 in December 2017. Popular altcoins such as ETH, BCH, LTC, XRP, etc. have also experienced the blood bath and fell steeply shedding 70% or more of their gains during the year 2018. To make the situation even worse, the current crypto market is showing no signs of recovery that is creating panic and fear amongst investors and traders.
These signs show that Bitcoin and altcoin investors are moving towards more stable traditional commodities like gold, says Jan Van Eck, CEO of Van Eck Associates and a man behind two most popular Gold ETFs namely the GDX gold miners ETF and GDXJ junior gold miners ETF. During an interview with CNBC’s ETF Edge on Wednesday Van Eck said:
“I do think that Bitcoin pulled a little bit of demand away from gold last year, in 2017. Interestingly, we just polled 4,000 bitcoin investors and their number one investment for 2019 is actually gold. So, gold lost to bitcoin and now it’s going the other way.”
Going through historical price data, Bitcoin had surged from $1,013 to $20,000 through the year 2017 and gold went up 4 percent over that same period of time. However, the equations changed in the year 2018 when Bitcoin lost 82% of its gain while gold was up 2.5% by end of the year.
Tim Seymour, founder, and chief investment officer of Seymour Asset Management says that it might be difficult for the investors to get back on Bitcoin and altcoins for a while.
“Not only have we lost all liquidity on the underlying [commodity] but truly outside of the existential blockchain argument, it’s been very difficult to argue store of value which is really what we started hearing about,” Seymour said on ETF Edge on Wednesday. “Gold is a store of value and there’s no disputing that.”
Promoting the most popular commodity, gold, Van Eck told ETF Edge that if investors choose to bid on gold shares in 2019 it would be through gold ETFs. “The shares have been acting tremendously well over the last two or three months … It’s starting to zig when the stock market zags,” Van Eck said.