Over the previous couple of weeks, Bitcoin has not been capable of rise above $4,000. Because of this, demand for the digital asset, which was as soon as drawing individuals away from conventional investments equivalent to gold, is waning and a spotlight is shifting elsewhere.
According to Jan Van Eck, the Chief Executive Officer of Van Eck Associates, demand is shifting away from Bitcoin and again to a extra conventional commodity – gold.
Discover iFX EXPO, Your Gateway to Asian Markets!
Jan Van Eck
Speaking to CNBC final week, Van Eck mentioned: “I do suppose that Bitcoin pulled just a little little bit of demand away from gold final yr, in 2017. Interestingly, we simply polled 4,000 bitcoin buyers and their primary funding for 2019 is definitely gold. So gold misplaced to bitcoin and now it’s going the opposite method.”
In December 2017, Bitcoin peaked above $20,000. In the 12 months main as much as this, the cryptocurrency’s worth managed to extend 25 instances over. During the identical interval, gold rallied 4 %.
Now, Bitcoin’s worth has plummeted by 82 % whereas gold is up by 2.5 %. According to Tim Seymour, founder and chief funding officer of Seymour Asset Management, this transfer away from Bitcoin is perhaps arduous to reverse.
Source: Seymour Asset Management
“Not solely have we misplaced all liquidity on the underlying [commodity] however really exterior of the existential blockchain argument, it’s been very troublesome to argue retailer of worth which is basically what we began listening to about. Gold is a retailer of worth and there’s no disputing that,” Seymour informed CNBC.
The cryptocurrency bear has a nasty chew
The cryptocurrency market was weighed down by a bear marketplace for most of 2018. Unfortunately for digital asset exchanges, the bear had a nasty chew.
As Finance Magnates beforehand reported, quite a few exchanges and crypto-focused corporations have needed to resort to disagreeable measures to remain afloat, which primarily consisted of letting go of their staff.
Companies equivalent to Bitmain, ConsenSys and extra have slimmed down their operations by letting go of huge parts of their employees. In addition, giant cryptocurrency mining corporations are pulling out of the trade.
In December, Japanese IT big GMO Internet introduced that it might be closing down its cryptocurrency-related enterprise because the profitability of its mining chips was falling similar to the worth of Bitcoin.
Only one week later, studies surfaced that e-commerce big DMM.com was closing down its mining enterprise in Kanazawa, Japan.