Bitcoin dominates the debate between gold and crypto

When Debra Robinson – a staunch gold advocate – scoffed that "It's ridiculous to spend $118,000 just to buy a string of numbers created by humans," she voiced the long-standing skepticism of precious metal enthusiasts. However, macro analyst Lyn Alden – a prominent Bitcoin supporter – calmly responded:

"Precious metal enthusiasts can allocate about 5% of their gold portfolio to buy Bitcoin. It's a way to hedge against risk as Bitcoin gradually gains market share, allowing them to relax on vacation without worrying about that asset anymore. Many have recommended this for many years now."

Bitcoin – risk or hedging strategy?

At the time of writing, Bitcoin is trading at 121,000 dollars, after reaching a new peak – reflecting global concerns about economic instability and inflation.

This "human-created number sequence" currently has a market capitalization exceeding 2.2 trillion dollars – higher than silver – and has become one of the most valuable assets on the planet. There are approximately 100 listed companies, including BlackRock and Strategy, holding nearly 1.3 million BTC – equivalent to about 6% of the total supply.

Of course, gold is also not to be outdone. The price of gold is currently near its historical peak, trading around $3,355 per ounce – just slightly below the highest level of over $3,500. However, Alden's proposal is not intended to replace gold, but rather a way to hedge against risk.

For a gold investor holding $100,000 in precious metal assets, allocating $5,000 to Bitcoin is a way to protect against the risk of Bitcoin continuing to overshadow the traditional role of gold as a store of value.

If Bitcoin continues to outperform, this small allocation could yield substantial returns for the entire portfolio. Conversely, if Bitcoin fails as many gold proponents believe, the losses would be limited to a very small portion.

"They could go to sea and completely forget about that asset," Alden joked but with deep meaning.

Historical Perspective: Bitcoin Changes the Balance of Value

Author Vijay Boyapati, who wrote the book "The Bullish Case for Bitcoin", shares another perspective from the past:

"I have recommended this since 2013. Back then, I saw Bitcoin as a backup insurance for gold. And now I see gold as a backup insurance for Bitcoin."

Boyapati's commentary shows that the perception of the risk level of Bitcoin has changed profoundly over a decade. From being a speculative gamble, Bitcoin has now become a mainstream asset, while gold has taken on a secondary role.

However, there are still skeptical voices. Yesterday, when reporting on the debate between gold and Bitcoin, Peter Schiff – a famous Bitcoin critic – continued to criticize this asset. Despite Bitcoin reaching its peak, Schiff urged investors to sell BTC to buy silver, citing the reason:

“Bitcoin is still a risky bet, while silver has strong potential for growth with much lower risk.”

Nevertheless, as the wave of acceptance for Bitcoin from large companies and organizations grows stronger, Schiff's warnings seem to be heard by fewer and fewer people.

Conclusion: Bitcoin – a strategic choice

Allocating a small portion of the precious metals portfolio into Bitcoin is a sensible way to protect against the risk of being overshadowed by technology. And as Boyapati said, the reasons for hedging with Bitcoin are becoming increasingly clear as the market becomes more liquid, larger, and recognized by institutions.

Gold enthusiasts may continue to criticize spending six figures on the "artificial number string," but the reality shows that Bitcoin is reshaping the concept of value preservation. As Alden and Boyapati suggest, investing a small portion in Bitcoin is not a reckless gamble, but a prudent way to manage risk in an ever-changing world.