Is Bitcoin Becoming the New Gold?
Bitcoin (CURRENCY:BTC) prices received a 2.5% jolt on the day after Donald Trump’s U.S. presidential victory, leading some to believe that the cryptocurrency will serve as insurance against the uncertainty of the new presidency.
Bitcoin prices have been having a pretty stellar month in the lead-up to the U.S. presidential election, topped off by the recent push after the election. Bitcoin’s value has risen by over 22% since the beginning of October. While certainly not all due to a possible Trump presidency, much of the market volatility we’re seeing today can be reflected in Bitcoin’s rise, with investors seeking out a safe and reliable anchor to cling to.
Bitcoin is not alone in benefiting from the situation, but its prices have seen a steadier climb today. Gold prices saw a rise on Wednesday, before falling later in the day.
Charles Hayter, CEO and founder of CryptoCompare, wrote that Bitcoin prices have been increasing due to safe-haven demand in response to Trump’s election victory. “Bitcoin is yet again acting as a form of digital gold and correlating strongly with the commodity – when there is uncertainty safe haven assets see a boost,” wrote Hayter in an e-mail to CNBC. (Source: “Bitcoin boosted by safe-haven demand after Trump victory,” CNBC, November 9, 2016.)
Hayter continued, “As with Brexit, bitcoin is seeing an upward jolt on the back of Trump’s election and the resultant lack of clarity on the global stage.”
Now, it’s not as if the bitcoin is known for being a traditionally stable safe-heaven asset. But, at the moment, it is trading at a relatively stable pace. Couple this stability with solid gains in Bitcoin prices, like a 57% increase year-to-date, and you have what may soon develop as an asset of choice for investors looking to weather the potential Trump storm that could rock markets in the future. (Source: “Bitcoin Price Jumps on Trump Victory,” Fortune, November 9, 2016.)
In any case, whether you believe Trump’s win will have little effect on the market in the short term, it’s important to know your options and understand just what tech investments might help you prepare for every eventuality. After all, that’s what Profit Confidential is here for.