In the investment showdown of 'Gold vs Bitcoin', Bitcoin is gradually gaining the upper hand.
Macro analyst Lyn Alden and the author of 'Reasons to be Bullish on Bitcoin' Vijay Boyapati both suggest that gold investors could swap 5% of their holdings for Bitcoin as a way to hedge against the risk of Bitcoin potentially continuing to capture market share.
Currently, Bitcoin's price is approaching $122,000, with a market capitalization exceeding $3.8 trillion, making it the fifth largest asset globally, surpassing silver and Amazon. Over a hundred publicly traded companies, including BlackRock and Strategy, hold nearly 2.7 million BTC, accounting for 13% of the total supply. In contrast, gold is also nearing its historical high of $3,500 per ounce, but its dominant position as a store of value is being challenged.
Lyn Alden states with specific numbers that if an investor holds $100,000 worth of gold, then allocating just $5,000 to purchase Bitcoin can achieve a balance: if Bitcoin's price continues to rise significantly, this 5% allocation can substantially enhance the overall investment portfolio's returns; conversely, even if Bitcoin's price crashes, the investor would only lose 5% of their total assets, keeping the risk manageable.
Vijay Boyapati points out that in 2013 he considered Bitcoin as 'insurance' for gold; however, the situation has now reversed, viewing gold as 'insurance' for Bitcoin. This shift in perspective clearly reflects the profound changes in the risk-reward curve of crypto assets over the past decade.
However, skeptical gold bull Peter Schiff continues to downplay Bitcoin and urges investors to switch to silver. But as companies and institutions accelerate their adoption of BTC, these bearish voices are gradually being drowned out by real market data.
As Alden puts it, investors can take 5% of their portfolio to go on a beach vacation and forget about that portion of their assets, while the remaining 95% is still safely stored in the vault. The brilliance of this strategy lies in allowing investors to bet on future trends at a minimal cost, while the principal amount remains absolutely safe.
Overall, converting a small portion of gold investment into Bitcoin is not a reckless gamble but a way to participate in this technological transformation at a lower cost while ensuring the majority of wealth remains secure, along with a prudent risk management strategy.
