Bitcoin Investors Moving to Gold
According to the Chief Executive Officer of Van Eck Associates, Jan Van Eck, Bitcoin’s investors are now moving to gold. In an interview with CNBC last Friday, Van Eck stated that in 2017 and 2018, Bitcoin had pulled demand away from gold to the cryptocurrency. However, now investors are moving back to gold as a preferred investment option.
Van Eck stated that a poll was conducted of 4,000 Bitcoin investors and it revealed that their prime investment for 2019 was gold. Thus, the tables had turned once again and now gold was back to being the preferred safe-haven investment option.
Bitcoin as a Store of Value
In that same interview, the founder and chief investment officer of Seymour Asset Management, Tim Seymour, while referring to Bitcoin ETFs (exchange traded funds), stated that the whole concept of Bitcoin being a store of value was now being questioned.
Seymour said that not only had all liquidity on the underlying commodity (BTC) been lost, but also that besides the Blockchain, it has been very difficult to formulate an argument for Bitcoin as a store of value. On the other, gold is indisputably a store of value.
Gold ETFs vs. Bitcoin ETFs
Van Eck Associates created some of the most popular gold ETFs – the GDX Gold Miners ETF as well as the GDXJ Junior Gold Miners ETF. Van Eck stated that both these exchange traded funds have been performing very well in the last 2 to 3 months. He also said that these ETFs seem to move in the opposite direction as the stock markets.
He gave the example of the previous quarter – the last quarter of 2018. When the S&P 500 Index dropped the GDX ETF went up. Added to this, this ETF grew 14% in the fourth quarter of 2018, which is the fund’s best performance since the second quarter of 2016. And finally, the GDX has already gained less than 1% for this year so far, vis-à-vis the S&P 500 Index, which is up by 6% for the same time period.
Bitcoin ETFs, on the other hand, are struggling to take off. The Chicago Board Options Exchange (Cboe) has taken back its application for a rule change by the US SEC (Securities and Exchange Commission), which would allow Cboe’s BZX Equity Exchange to list ETFs backed by Van Eck and SolidX.
Bitcoin’s average daily price by the end of 2018 was at the lowest value it had been in the last 9 years.