Is Bitcoin the New Gold in the Financial Markets?

Gold prices have been steadily tumbling in the past few weeks, more so recently after the Chinese reserves data revealed a smaller than expected portion of gold reserves. Gold has been treated as a hedge against inflation, typically gaining in value also when investors are seeking lower-yielding returns from safe-havens.

This time around, even with all the monetary policy easing going on among central banks and the prospect of another downturn in inflation, gold prices have failed to rally. Some financial market experts say that gold prices might not see much upside anytime soon since investors are moving funds to alternative investments like bitcoin.

Bitcoin vs. Gold

As of this writing, gold prices are down nearly 40% from their peak back in 2011. At that time, gold has drawn a lot of demand when central banks had been intervening in the forex market to control their respective currencies’ values or to stimulate their economies. This has led to a bit of distrust in the financial system, leading traders to diversify their holdings to more secure assets like gold.

Just like bitcoin, gold draws its value from scarcity since the limited amount in circulation and consistent demand are driving prices higher. However, demand has significantly

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