On February 3, the debate between Bitcoin and gold continued. Goldman Sachs commodities team expects the precious metal to gain the upper hand in 2022 as market volatility increases.
Gold remains steady at around $1,800, while Bitcoin saw a massive loss of about 20% in January, its worst start to the year since its inception. Bitcoin recently traded around $36,000 per coin, down more than 50 percent from its record high in November.
In a report published last week, commodities analysts at Goldman Sachs said that slowing economic growth in 2022 will continue to weigh on major cryptocurrencies.
“While there is no talk of a recession yet, our economists expect a substantial deceleration in U.S. growth,” the analysts said. “It’s important to remember that risk aversion compared to assets such as stocks is The main driver of investment interest in gold, to a greater extent, than Bitcoin. In our view, gold is a hedge against inflation risk, and Bitcoin is a hedge against inflation risk. For those looking for a For investors looking to hedge their portfolios against slowing growth and falling valuations, we believe gold bulls will be more effective in the current macro environment.”
Analysts noted that despite Bitcoin’s record nominal returns last year, the market’s risk-adjusted returns were lower than the broader market.
“As we often say, we believe this is due to the lack of use of cryptocurrencies outside of digital stores of value, suggesting that it is too early for cryptocurrencies to compete with gold or the U.S. dollar for defensive asset investment flows.”
The analysts
Bitcoin isn’t the only one taking a beating as investors start to cut risk in their portfolios. The volatile tech sector has been badly affected, with the Nasdaq down more than 11% since the start of the year.
Thursday was particularly devastating for Meta Platforms, with shares down more than 26%, losing more than $230 billion in just one session. The sell-off came after the company reported its first drop in daily active users in 18 years.
