Posted 11 months ago | by Ben Armstrong

Coinbase – Bitcoin Could be More Attractive than Gold

In a recent blog post from the company, major crypto exchange Coinbase argued that Gold and Bitcoin have things in common that could drive their prices higher. Aspects like scarcity and being a globally accessible store of value make gold and Bitcoin attractive assets.

However, after the COVID-19 pandemic spread worldwide, it is simple to see that Bitcoin has some advantages over gold. Bitcoin can be easily accessed globally and is not dependent on fragile physical supply chains, it is also discrete, and can't be easily inventoried by a government.

Coinbase also provided some supporting evidence related to gold by the Los Angeles Times and the Wall Street Journal. Both publications have touched on the gold market, and why we may see higher prices ahead.

Bitcoin May Follow Gold Higher

According to The LA Times, the gold market facing many difficulties, especially when it comes to supplies. The COVID-19 pandemic destroyed physical trading routes, while investors have moved into the yellow metal via the futures market in an attempt to buy safe assets.

According to The Wall Street Journal, since the pandemic started, investors and bankers faced even more difficulties because of the severe shortage of gold bars and coins. While this hasn't really made investors question the futures market as an investment route, ongoing shortages of gold could change that.

Meanwhile, Bitcoin's core protocol is working fine, and its supply has dropped via the very recent halving. The rate of increase in the BTC supply should be less than 2% per year, which is far below the rate at which global governments are pouring money into the financial system.

The Advantages of Bitcoin over Gold

Coinbase said that Bitcoin's hash rate is likely to continue to drop further after the halving, which may help the world's most popular token (measured via market cap) to rise in price.

Also, Coinbase added that despite the recently volatile economic market, the Bitcoin price had been relatively stable. It has bounced back along with a number of assets over the past few months and may continue to hold on to higher levels.

Of course, there is no way to know when another crazy selling panic will sweep across the world markets, which would probably include some crypto selling. Over the medium-term, the picture for Bitcoin is much brighter, as it offers people lots of functionality, as well as an asset that isn't connected to central banks.