Gold vs Bitcoin: Here's what you should know before investing in these rising assets

Investors weighing the merits of gold versus Bitcoin as long-term assets have a lot to consider. Both have delivered significant returns over the years, but their paths, characteristics, and risks differ markedly.

If you’re thinking about diversifying into these assets, here’s what you need to know.

Gold: A timeless asset

Gold has long been viewed as a safe haven. A recent Deutsche Bank report highlighted its impressive performance as the best-performing mainstream asset in the first 25 years of this millennium, Bloomberg reported.

Its history stretches back thousands of years as a reliable store of value, particularly in times of economic uncertainty.

Gold’s appeal lies in its stability. Unlike cryptocurrencies, its value isn’t subject to the whims and fancies of speculative markets or regulatory shifts.

Investors often see gold as a hedge against inflation and currency devaluation, making it a favoured choice in volatile economic climates.

Bitcoin: The digital frontier

Bitcoin, by contrast, represents a newer, more volatile option. Emerging in 2009, it has grown rapidly in popularity and value, now trading around $90,000.

While critics argue that its speculative nature makes it risky, proponents see Bitcoin as the future of digital money and a robust store of value.

One factor fueling Bitcoin’s rise is its finite supply, capped at 21 million coins. However, about 20 per cent of Bitcoin’s supply may be permanently lost due to forgotten passwords and misplaced wallets, underscoring one of its unique risks.

Cryptocurrency markets have surged recently, buoyed by policy discussions and enthusiasm for new regulations. Total market capitalisation hit a record $3.1 trillion, driven in part by President-elect Donald Trump’s pro-crypto stance and promises to ease regulations.

Yet Bitcoin’s value remains highly sensitive to monetary policy and market momentum, making it a challenging asset for conservative investors.

Gold vs. Bitcoin: What experts say

Experts frequently debate the merits of gold versus Bitcoin. While opinions vary, one recurring theme is that both assets serve different purposes.

Gold is seen as a traditional, stable choice for wealth preservation, while Bitcoin offers high-risk, high-reward potential.

Some analysts that Bloomberg has spoken to have argued Bitcoin could eventually rival gold as a long-term store of value, but others remain skeptical.

Unlike gold, Bitcoin’s future is uncertain, with questions about its regulatory environment and potential adoption as a global financial tool.

Diversifying for balance

For those torn between these two options, experts suggest a balanced approach. Holding both gold and Bitcoin— perhaps with a greater emphasis on gold for stability— can provide diversification and hedge against varying market risks.

Both assets offer opportunities but require careful consideration. Checking in with your financial advisor is advised before making big money-related decisions.

With inputs from agencies