Trading in cryptocurrencies is growing increasingly popular. Even though predicting the future of such a turbulent market is pure speculation, millennials have been drawn to the quick growth in the value of digital currencies such as Bitcoin and Dogecoin this year. Many people, however, remain skeptical of cryptocurrencies’ long-term prospects and would rather invest safely in assets such as gold, a classic hedge against currency depreciation and volatility. So, which is a wiser investment? To put it another way, consider which of these assets would have made you wealthier today if you had invested at the start of the year.
Bitcoin was dubbed “digital gold” throughout 2020 because it followed the precious metal’s path as the global economy collapsed owing to the ongoing COVID-19 pandemic. Early in 2021, the cryptocurrency had a market capitalization of about $1 trillion, and it appeared to be on par with gold as a store of wealth that was projected to rise significantly more over time. But, in May of this year, the market plummeted, wiping off much of the gains.
According to CoinMarketCap, the price of Bitcoin in India on January 1st was just over $29,300 (Rs 21.38 lakh). It was trading at roughly $37,600 (Rs 27.44 lakh) at the time of writing this post, up roughly 30% despite the market meltdown.
On the other hand, on June 3, gold prices on the worldwide market were $1,904.36 per ounce (approximately Rs. 1.39 lakh). Gold prices hit their highest level since January 8 on Tuesday (June 1), at $1,916.40. (roughly Rs. 1.39 lakh). According to Goldprice.org, the price of gold has remained relatively stable between January 1 and June 4, at around $1,893.66 (approximately Rs. 1.38 lakh) per ounce.
If you had invested Rs 10,000 in each on January 1, your Bitcoin investment would have increased by 30% to Rs 13,000 today, while your gold investment would have remained essentially constant.
To make things even more intriguing, if you had invested Rs 10,000 in the meme currency Dogecoin on January 1, your money would have grown 100-fold by today, June 4. According to CoinMarketCap, the price of Dogecoin in India has surged substantially from $0.004 (approximately Rs. 0.30) on January 1 to $0.39 (approximately Rs. 28) on June 4.
However, given the recent volatility in the cryptocurrency market, Bitcoin and Dogecoin’s status as viable replacements to gold or any other traditional asset may be questioned.