“As the world’s largest cryptocurrency slips to $38,000, the lowest price since August, its decline in tandem with risk assets such as tech stocks is casting a shadow on a long-touted similarity to gold.”
USAGOLD note: Imagine yourself as private citizen Elon Musk and that three months ago you sold your 3-year old Tesla. In payment, you accepted bitcoin and decided to hold onto the remittance because it looked to have a very bright future. At first, your decision looked to be a very shrewd maneuver as the cryptocurrency rose 10%. But then things began to go in the other direction. By the end of last week, the value of your holding dropped 40%! Not so shrewd after all. You just sold your Tesla for about 60% of its value. To the rest of the world, your plight illustrates why bitcoin can never be mistaken for gold. Had you taken gold in payment, instead, the value of your holding would have risen by about 2%. The truly shrewd investor will note, at the same time, bitcoin’s trading in sympathy with tech stocks, particularly those priced on shaky foundations.
Chart courtesy of TradingEconomics.com