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Is bitcoin “digital gold”?

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There is no consensus yet on whether bitcoin is a protective or speculative asset. Few investors and institutions invest capital in the first cryptocurrency for protection against inflation. Studies of the correlation between bitcoin and various asset classes show that it behaves differently in different market situations.

Why is bitcoin not recognized as digital gold?

The main function of gold as an investment asset is its ability to maintain and increase its value during crises. When there is a prolonged period of recession in the economy, investors sell high-risk assets – which include stocks, for example – and buy means of preserving value, particularly gold.

Since the launch of the cryptocurrency’s main network, its price has risen consistently from year to year. But over shorter periods, bitcoin is a volatile asset. This makes it akin to high-risk assets. 

Various researchers have repeatedly found correlations between bitcoin and the stock market. In April 2022, Arcane Research said the movement of the first cryptocurrency was closest to tech stocks, which are considered a riskier segment of the stock market.

A few months before that, analysts at Goldman Sachs had warned that bitcoin’s price depended on macroeconomic factors and that its value could fall due to a tightening of Fed policy. That is exactly what happened later.

According to Bank of America, since 2021, the price of the first cryptocurrency has correlated with the stock market. As an example, the bank researchers cited the correlation with the key stock indices – S&P 500 and Nasdaq 100. Therefore, bitcoin is not a defensive asset, the bank believes.

What are the arguments for the digital gold thesis?

There are also arguments that speak in favor of bitcoin as a store of value. First, bitcoin’s protective properties have been talked about by prominent investors. The thesis of “digital gold” in 2021 was supported by American financier Ray Dalio, although he later noted that the first cryptocurrency lost out to gold.

In April 2022, former BitMEX chief Arthur Hayes opined that bitcoin would eventually become a defensive asset because of Fed policies and the depreciation of the dollar.

Second, a study by ForkLog found that during the 2020 crisis, the first cryptocurrency correlated mostly with the precious metal.

Third, bitcoin can change its correlation with different asset classes depending on market conditions. The view that the value of the first cryptocurrency is starting to coincide in behavior with risky assets during market declines was expressed in 2020 by The Block researcher Larry Chermack.

Another pro argument is the actual use of bitcoin as digital gold. Despite its high volatility, a lot of large companies already hold savings in the first cryptocurrency. According to the Bitcoin Treasuries website, Tesla, Core Scientific and Square are among them. 

One of the main proponents of bitcoin as a protective asset is MicroStrategy CEO Michael Saylor – his company owns almost 130,000 BTC.

Also, bitcoin is already being used in government reserves. Since 2021, the government of El Salvador has been buying bitcoin for its treasury.

JPMorgan believes that bitcoin has the potential to become digital gold due to its acceptance among institutional investors. but the first cryptocurrency’s dependence on inflation holds it back from achieving this goal. 


Cryptocurrency

EY Launches Ethereum-Based OpsChain Contract Manager for Business Contracts

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Ernst & Young (EY) has launched OpsChain Contract Manager (OCM), an Ethereum solution that leverages zero-knowledge proofs technology.

The solution will help private businesses efficiently manage and execute intricate business agreements while ensuring confidentiality, timeliness, and cost-effectiveness.

EY Launches the OpsChain Contract Manager

EY, one of the top “big four” accounting firms alongside Deloitte, KPMG, and PwC, has been exploring the business applications of zero-knowledge proofs (zk proofs) since at least 2018.

OpsChain Contract Manager (OCM) is tailored to facilitate the secure management of business contracts on a public blockchain. By leveraging zero-knowledge proofs, OCM ensures contract integrity and confidentiality while enhancing efficiency and reducing costs.

The platform integrates with existing enterprise systems through a standardized API and supports various contract types, including volume purchase agreements and pricing models linked to market data feeds.

The development of OCM came from EY’s previous client engagements, where it realized that contract term accuracy could be enhanced while significantly reducing cycle times and administrative costs by approximately 90% and 40%, respectively.

Meanwhile, EY chose Ethereum, a public blockchain, over a private network to prevent any party from gaining undue advantage while mitigating the risk of sensitive business information leakage.

Paul Brody, EY Global Blockchain Leader, highlighted that the technology behind OCM, Nightfall, initially emerged on Ethereum and underwent testing on its test network. The upcoming update will transition Nightfall to Ethereum’s mainnet and may incorporate a Layer-3 upgrade to enhance scalability and functionality.

EY’s Venture Into Blockchain

EY’s launch of OpsChain Contract Manager comes amid increasing blockchain adoption by major financial players. BlackRock also recently entered the space with a tokenized fund on Ethereum.

EY’s OCM reflects its commitment to revolutionizing how enterprises handle contracts, focusing on enhancing process efficiency and transparency through blockchain solutions. By integrating blockchain into traditional business practices, EY sets a precedent for the industry’s progression toward embracing this transformative technology in routine operations.

This latest development builds upon EY’s ongoing engagement with the blockchain sector. EY recently made headlines with a “healthcare breakthrough” by leveraging blockchain technology in collaboration with Canadian Blood Services.

In October 2023, EY unveiled the fourth generation of its EY blockchain analytics tool, Reconciler, designed to aid Fidelity in enhancing internal risk management for digital assets.

In September 2021, EY also announced its collaboration with Polygon to integrate Polygon’s solutions with EY’s flagship blockchain services, including EY OpsChain and EY Blockchain Analyzer.

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ChatGPT Analyzes Which Meme Coin Will Perform the Best After the Bitcoin (BTC) Halving

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TL;DR

  • The Bitcoin halving has slashed the miners’ block rewards in half, reducing the daily issuance of BTC and likely resulting in a price rally.
  • While it is speculative to predict which meme coin will perform best post-halving, Dogecoin and Shiba Inu have historically done well, with potential boosts from technological advances, celebrity endorsements, and community support.

The BTC Halving’s Impact

One of the most important events in the cryptocurrency industry – the Bitcoin halving – occurred the other day. It reduced the miners’ block reward from 6.25 BTC to 3.125 BTC, slashing in half the daily issuance of the primary digital asset. 

The mechanism is integral to Bitcoin’s supply system and has a direct impact on its inflation rate. The decreased amount of coins entering the market makes them scarcer. As basic economics dictates, a reduction in supply with the same or more demand results in an increasing price.

The halving happens roughly every four years and historically has been a precursor of a massive resurgence of BTC and the entire cryptocurrency market. As such, we decided to ask ChatGPT whether meme coins will experience such a revival in the following months, as well as which asset of that type will perform the best.

ChatGPT’s Answer

The popular chatbot forecasted that the halving may fuel a substantial green wave in the crypto sector, with the volatile meme coin niche benefiting, too. It claimed that predicting which asset of that kind will be the best performer in the following months is highly “speculative” but reminded that Dogecoin (DOGE) and Shiba Inu (SHIB) witnessed explosive price growth after the previous halving.

Nowadays, though, there are many more meme coins that oppose the dominance of the aforementioned leaders. Notable examples include dogwifhat (WIF), Pepe (PEPE), and Floki Inu (FLOKI), which all have market capitalizations in the billions.

ChatGPT estimated that technological advancements, endorsements from popular figures, and community activity could boost their value toward the top. However, Shiba Inu is the meme coin with the biggest community base, while Dogecoin enjoys the support of Tesla’s CEO – Elon Musk.

Subsequently, the chatbot alerted people to enter the meme coin ecosystem with a grain of salt due to the risks associated with it. If you are about to hop on the bandwagon, please check our dedicated video to avoid some common mistakes related to the matter:

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Shiba Inu (SHIB) Explodes 18% Daily, Bitcoin (BTC) Taps $65K (Weekend Watch)

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Bitcoin’s price recovery continues following the recent massacres, and the cryptocurrency has jumped to about $65,000 as of now.

The altcoins are even more in the green now, with ETH and BNB surging by approximately 4%, while SHIB has stolen the show.

Bitcoin Aims at $65K

It’s safe to say that the week leading to the fourth Bitcoin halving was quite painful. The asset fell from over $70,000 to $65,000 last Friday before it dumped to $61,000 a day later.

After regaining some traction by Monday, BTC went for another freefall in the middle of the week and one more on Friday amid the escalating tension between Iran and Israel. The last massive drop took BTC to below $60,000 just hours before the highly-anticipated halving was supposed to take place.

However, the cryptocurrency soared by over five grand in the next half a day and stood at around $65,000 when the halving was completed.

Since then, there has been little volatility and Bitcoin currently sits around $65,000 once again after failing at $66,000 earlier today. Its market capitalization remains below $1.3 trillion, while its dominance over the alts has taken a hit and is down to just under 51%.

BTCUSD. Source: TradingView
BTCUSD. Source: TradingView

SHIB Takes the Main Stage

The altcoins have performed a lot better than BTC in the past 24 hours, led by the second-largest meme coin – Shiba Inu. SHIB has skyrocketed by 18% and now trades above $0.000027.

Other lower-cap meme coins have also presented double-digit gains, such as BONK, FLOKI, and PEPE.

Solana, Avalanche, Bitcoin Cash, Dogecoin, Chainlink, Polygon, and Polkadot are also well in the green, with gains of around 6-8%.

The total crypto market cap has increased by over $50 billion in a day and sits above $2.5 trillion on CG.

Cryptocurrency Market Overview. Source: QuantifyCrypto
Cryptocurrency Market Overview. Source: QuantifyCrypto
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Disclaimer: Information found on CryptoPotato is those of writers quoted. It does not represent the opinions of CryptoPotato on whether to buy, sell, or hold any investments. You are advised to conduct your own research before making any investment decisions. Use provided information at your own risk. See Disclaimer for more information.

Cryptocurrency charts by TradingView.

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