Deutsche Bank Sees Bitcoin Maturing Toward Gold-Like Store of Value

Deutsche Bank has examined Bitcoin and gold in a comparative study. It concludes that Bitcoin’s volatility is decreasing, suggesting a convergence with gold as a store of value and enabling coexistence.

Gold reached a new record high at over $3,750 per troy ounce at the beginning of the week, prompting a comparison with Bitcoin (BTC) in the crypto scene once again. Deutsche Bank has just published a recent analysis comparing the precious metal with the leading cryptocurrency. The starting point is that gold has proven itself as a store of value in uncertain times, and Bitcoin is moving toward a similar status.

Bitcoin price fluctuations are decreasing – convergence with gold

The analysts recall how gold experienced phases in which speculation dominated the market. It was only with the financial crises of the 21st century that gold regained its importance as a store of value.

This development can be seen with a time lag in Bitcoin, where the approval of BTC ETFs and the strategy of companies like Strategy from 2020 onwards have ensured a more consistent performance. The study cites August as an example, when Bitcoin set a new record high of around $124,500, while the volatility of the BTC price remained at its historically low level. The experts at the German bank conclude that Bitcoin is maturing.

Bitcoin reserves at central banks underline importance

But can Bitcoin then also take over gold’s role as a store of value, especially with regard to the reserves of state central banks? The report lists Bhutan and El Salvador, where central banks are already building BTC reserves. The launch of a strategic BTC reserve in the US in March should also not be underestimated; the analysts describe this development as “a small step for America, a giant leap for Bitcoin.”

Looking ahead to the 2030 time horizon, the German bank therefore expects competition and coexistence between BTC and gold as a store of value. From this perspective, clear crypto regulations in the US, UK, and the EU favor the option of including Bitcoin in reserves. It is still predominantly private companies that rely on BTC as “digital gold,” also considering profit opportunities.

However, central banks in Kazakhstan, Ukraine, the Czech Republic, and elsewhere intend to include Bitcoin in their reserves. “History repeats itself,” say the analysts, and Bitcoin is on its way to achieving the status that gold has earned over decades.

Conclusion: Gold versus Bitcoin? Or peaceful coexistence?

This snapshot is difficult for Bitcoin investors: While BTC, at around $113,000, is lagging almost 10 percent behind its all-time high today, Tuesday, gold is setting a new price record. However, the price gap has narrowed, and investors are demanding both BTC and gold to hedge against the risks of US monetary policy and a weak dollar.

Even during the 2020 coronavirus lockdowns, Deutsche Bank observed the trend of using Bitcoin as an inflation hedge, thereby taking market share from gold. Analysts now view this development as irreversible and predict bright times for Bitcoin, without committing to a price target.

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(Featured image by Kanchanara via Unsplash)

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First published in BLCOK-BUILDERS.DE. A third-party contributor translated and adapted the article from the original. In case of discrepancy, the original will prevail.

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