Should You Buy Gold or Bitcoin?

We look for the answer to the question of "Gold or Bitcoin", which is on the agenda of individual investors, by examining both markets and looking at institutional investor behavior.

After the Bitcoin price entered the bull market, gold holders began to buy Bitcoin by exchanging their gold. Gold sales reached record levels for this reason.

Commenting on the ongoing rally in Bitcoin (BTC) price, many analysts state that the power of institutional investors should be approached with caution. After the high rate of increase in the gold market, gold began to see serious sales.

Jan Nieuwenhuijs, a finance researcher, tweeted on November 24 that the biggest weekly sale in gold history was experienced. This process, which saw high sales in the gold market, started to attract a lot of attention. Then, the increasing purchase volumes in the Bitcoin market were interpreted as institutional investors turning to the crypto market. An example of this is the announcement of Guggenheim Partners, which manages approximately $275 billion worth of assets, as the newest institution to buy Bitcoin.

So, what does this trend mean for Bitcoin?

The entry of this capital, which is directed to Bitcoin from gold and will be held in the medium / long term, can cause two main trends: 

First of all, Bitcoin is expected to have a longer-lasting upward trend due to the bull market it has been in since September 2020. Investors turning to Bitcoin (BTC) are accumulating Bitcoin with a long-term strategy as they expect the continuation of the rising price trend with purchases. Raoul Palbu, CEO of Real Vision Group, made some statements about the situation: “I placed an order to sell all my gold tomorrow and buy 80 to 20 BTC and ETH. Other than some bond buy orders and some dollars, I have no other investments. In terms of liquidity, 98% of my net assets consist of these.”

The second expected trend is that, in the view of most fund managers, Bitcoin will have a more dominant influence in the cryptocurrency market. The market cap of Bitcoin currently available accounts for approximately 64% of the global cryptocurrency market cap.

Kyle Davies, co-founder of Three Arrows Capital, one of the largest funds in the cryptocurrency industry, explained: “No one buys gold. BTC > altcoins. This year has seen a massive influx of dollars or gold into BTC. This is not the business of individual investors. These men are not drifting on the waves.”

Bitcoin's short-term trend remains uncertain

Bitcoin value has been rising with strong momentum over the past three months. Although not at the same rate as this uptrend, major corrections were also seen in Bitcoin value.

It is seen as a usual scenario for Bitcoin to experience a pullback of about 30% in previous bull markets. The latest decline is not considered one of the biggest regressions, as analysts state that Bitcoin may see a harder decline for the short term.

CryptoQuant CEO Ki Young Ju revealed that whales in the market have been holding more Bitcoin than in the past few months. This shows that the whales in the market have an expectation that they will sell more Bitcoin in the coming days.

In the uptrend of Bitcoin, it was observed that the purchases continued after these sales. In this case, new peak prices continue to occur despite price corrections. In this case, the question of “Gold or Bitcoin” seems to remain on the agenda of investors for a while.