• Gold is also seen as a so-called haven against hedging returns amid macroeconomic uncertainties. But gold is no longer seen as heaven alone.
The Diwali season has begun with Dhanteras on Saturday, where the demand for gold has traditionally been on the rise. In India, buying gold on Dhanteras is somewhat common as the yellow metal symbolizes wealth, security and financial well-being. Gold is also seen as a so-called haven against hedging returns amid macroeconomic uncertainties. But gold is no longer seen as just a haven, the cryptocurrency especially the leader bitcoin is also known as a haven and even called digital gold. With that being said, which is the better investment option this Diwali?
Palash Udhwani, an investment analyst at Kunji.io, points out the similarities between bitcoin and gold that are very high.
Known as Digital Gold, Udhwani said, “BTC has many characteristics similar to gold, namely global availability, high demand and low supply. The supply and emission of BTC in the market cannot be changed as it is algorithmically programmed. Same. The factor helps drive the price of BTC up over time. The total emissions of BTC in circulation tend to decrease over time as emissions are halved every four years.”
According to data from Kunji.io, which is India's first crypto asset management platform, in the last five years, bitcoin has outperformed gold in the last five Diwalis.
On the Diwali of October 19, 2017, bitcoin saw a rise of 312.5%, while gold saw a rise of 29.5%. Furthermore, on Diwali held on November 6, 2018, bitcoin registered a gain of 196.3% while gold gained 36.1%, however, it is worth noting that the yellow metal saw gains, while bitcoin gained in 2017. level was reduced. Notably, on Diwali held on October 27, 2019, both Bitcoin and Gold saw their gains decrease by 99.9% and 11% respectively. However, during Diwali 2019, Bitcoin still outperformed.
On November 14, 2020, during Diwali, bitcoin registered a gain of 18.7%, while gold recorded a decline of 11.6%. But on the Diwali of November 4, 2021, bitcoin fell by a whopping 68.9%, while gold fell by only 6.7%. In 2021, gold outperformed bitcoin. Overall in 5 years bitcoin has given more returns than gold.
Over five years, while the average return on gold investment would have been around 11%, the same for BTC is around 111.7%.
For competitive quantitative analysis, Udhwani said, if you had bought ₹50,000 worth of gold for each year on Diwali in 2017, your current portfolio value would have been ₹2,79,150 on an investment of ₹2,50,000. Had you bought BTC from him, the return would have been ₹5,29,250.
Returns on BTC may sound attractive, said Udhwani, but the broader crypto landscape offers us many more opportunities to extract higher alpha. If you had positioned BTC with a set of promising quality altcoins, a similar trend could be seen in the same.
Giving an example, Udhwani said, you invest around $600, around ₹50,000 in six good quality altcoins from the last 5 Diwalis. With the combination of BTC itself there will be a return of 659.624% and a pure altcoin
play would have achieved 1207% return. The altcoins used here in the strategy are ETH, BNB, LTC, XRP, ADA and LINK.
According to the expert, BTC, being a significant asset with more than a decade of history, has also inspired many other decentralized projects and protocols, which offer great upside potential when appropriate strategic positioning and risk management are taken.
Talking about the current state of the bitcoin-gold correlation, Udhwani said, till the time the market reaches its peak, the pressure on gold and other quasi-investment metals like silver and platinum is likely to remain under pressure. The correlation between bitcoin and gold has reached its all-time high in the past 12 months, despite rising interest rates attracting investors to a stronger dollar.
Furthermore, Udhwani said, "Although bitcoin is perceived as "digital gold" and a hedge against inflation, investors are not very much in agreement with the yellow metal. As inflation has risen over the past several months, bitcoin and gold A sharp increase in the value of .
On Saturday, at the time of writing, bitcoin is trading above the $19,200 mark with a 24-hour gain of around 1.5% on CoinMarketCap.
According to Good Returns data, 22 karat gold in India is available on Saturday at ₹ 47,000 in 10 grams, which is ₹ 750 more than the previous day. Whereas the price of 24 carat in 10 grams is ₹ 51,280 which is ₹ 830 more than the previous day.
Meanwhile, on Friday, gold futures maturing on December 5 on MCX closed ₹492 or 0.98% higher at ₹50,635 on MCX.
No comments:
Post a Comment