Comparing Gold and Bitcoin in a Recession
When discussing a possible recession, the comparison between gold and Bitcoin often arises. While some believe in a soft landing, others, including investment manager VanEck, predict a US economic recession in the first quarter. Signs of an impending slowdown include a broader commodities and employment slowdown, struggling retail shares, and an inverted yield curve.
Macro Conditions Favor Gold Price
According to Joseph Cavatoni of the World Gold Council, gold will thrive amid market risk and uncertainty. Central banks are increasingly diversifying away from the US dollar and into gold, potentially driving up demand. Geopolitical factors also play a role in boosting gold’s appeal.
“Investors are paying more attention to gold because they don’t want to be blindsided in 2024,” he said.
Although gold’s technicals have been weak recently, Cavatoni expects its performance to be influenced by macroeconomics in the coming months. The asset reached an all-time high of $2,150 per ounce but faced selling pressure. If it stabilizes, it could surpass the $1,990 and $2,010 levels. However, if more selling occurs, the price could drop below the 200-day simple moving average of $1,950.
Bitcoin as a Countermeasure to Recession
VanEck predicts that Bitcoin ETF approvals will support the cryptocurrency’s price in 2024. With minimal volatility, Bitcoin is unlikely to drop below $30,000 in Q1 and may become an important part of investment portfolios.
The financial firm anticipates $2.4 billion in inflows for Bitcoin in one quarter and expects the asset to gain market share from gold as US voters become aware of currency devaluation through money printing. ETFs could see inflows of $40.4 billion in their first two years.
In summary, if a recession occurs, Bitcoin ETF approvals may counteract the effects of Fed money printing, while gold may benefit from rate cuts if the US economy experiences a hard landing and central banks opt for holding the precious metal over the US dollar.
Hot Take: The Battle between Gold and Bitcoin in a Recession
The debate over whether gold or Bitcoin is the better investment during a recession continues. While gold has historically been seen as a safe haven asset, Bitcoin’s potential to counteract economic downturns is gaining attention. With predictions of a US economic recession and increasing interest in Bitcoin ETFs, investors are weighing their options carefully. Both gold and Bitcoin have their merits and potential risks in a recessionary environment. It remains to be seen how these assets will perform in the face of economic uncertainties.
By
By
By
By
By