Bitcoin As a Digital Gold

CRYPTO BUSINESS

Nearly Bitcoin has been referred to as digital gold for a number of years, but 2019 was the year when that meme became much more realistic, according to data from the last six months of the year. In fact, the idea of Bitcoin as digital gold became so prevalent in 2019 that U.S. Congressman Brad Sherman (D-CA) claimed the crypto asset may be a threat to the U.S. dollar’s dominance in the global economy

At the start of 2020, the similarities between Bitcoin’s and gold’s price movements around increased tensions between the United States and Iran did not go unnoticed. However, longer-term measurements of the correlation between Bitcoin and gold still indicate there is a very weak correlation between these two assets.

The digital gold use case is often referred to as Bitcoin’s core value proposition, so a closer correlation with physical gold could indicate a greater level of understanding and acceptance of this point from market participants. Additionally, the introduction of central bank-issued digital currencies could clarify the value proposition of something like Bitcoin in the minds of the general public.