American economist Peter Schiff has a long-standing reputation for questioning the sustainability of Bitcoin (BTC) and the general cryptocurrency sector.
His criticisms contradict some financial sector players who believe that Bitcoin has the potential to replace gold as a store of value. However, Schiff, a gold bug, maintains that the precious metal’s superiority is unmatched.
Indeed, the economist has capitalized on moments of market downturn to warn investors to get out of crypto. One notable instance was November 14, 2022, during a prevailing crypto winter. In an X post, Schiff declared that crypto was facing extinction.
“This is not a #crypto winter. That implies spring is coming. This is also not a crypto ice age, as even that came to an end after a couple of million years. This is crypto extinction. <…> Gold will rise again to lead a new breed of asset-backed cryptos,” he said.
It is worth noting that since Schiff’s post, both commodities have undergone rallies to trade at new all-time highs. At the time of Schiff’s post, Bitcoin traded at $16,618.20, while gold was valued at $1,776.90 per ounce.
Investing in gold and Bitcoin
Investors who heeded Schiff’s advice to stick with gold might now be curious about how their investments have fared. Similarly, those who disregarded his warning and invested in Bitcoin may be eager to see the outcome. Therefore, here is how an investment of $1,000 in each asset would fare since the post.
If an investor placed $1,000 in gold on November 14, 2022, they would have purchased approximately 0.5627 ounces of gold ($1,000 / $1,776.90 per ounce). As of June 14, 2024, gold is trading at $2,336.65 per ounce. Consequently, the 0.5627 ounces of gold would now be worth approximately $1,314.33. This represents a percentage increase of 31.43%.
If one invested $1,000 in Bitcoin on the same date, they would have acquired approximately 0.06016 BTC ($1,000 / $16,618.20 per BTC). By press time, Bitcoin was trading at $66,906. The 0.06016 BTC would now be valued at approximately $4,023.57, reflecting an increase of 302.36%.
Bitcoin dwarfs gold
Over the same period, a $1,000 investment in gold would now be worth approximately $1,314.33, resulting in a profit of $314.33. In contrast, the same investment in Bitcoin would now be valued at around $4,023.57, yielding a profit of $3,023.57.
Overall, despite Schiff’s strong stance against cryptocurrencies, an investment in Bitcoin significantly outperformed gold over the same period.
It’s important to note that gold has built a reputation as a stable asset, existing for centuries, while Bitcoin is still in its infancy. Therefore, it remains to be seen if Bitcoin can catch up to gold in terms of its role as a store of value in the traditional sector.
Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.
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