One-third of Surveyed Gold Buyers View Bitcoin as the Better Bet

The popularity of bitcoin is poised to affect the gold market, Paxos executive says

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key takeaways

  • Most astute investors realize the importance of bitcoin in a digital world, Bloomberg Intelligence strategist says
  • Gold ETFs are a main way investors report gaining exposure to the asset, but a spot bitcoin ETF has not yet been approved

About half of surveyed gold buyers report plans to acquire more of the asset, but a third of respondents believe bitcoin is a viable alternative, according to a survey by blockchain infrastructure platform Paxos.

The survey, published Wednesday, gathered responses from 1,000 adults in the US, UK, Singapore and Germany who have purchased some form of gold — ETFs, physical bars, gold coins or tokenized gold — in the past two years. The answers were collected in mid-April.

The top motivation for those saying they plan to buy more gold is concern around inflation, which has reached a 40-year high.

Other top motivations included equities market troubles and worry around geopolitical factors and fiat currency debasement, the survey found. Crypto market concerns ranked fifth among reasons to buy more gold. 

With unpredictable geopolitical, global health and economic forces continuing to roil the markets, the demand for the relative stability of gold investments will continue to increase, Anoushka Rayner, Paxos’s head of growth for commodities, wrote in a Wednesday blog post. 

“There is a wild card in the mix as well,” Rayner added. “The popularity of bitcoin is poised to affect the market, with 33% of respondents saying ‘bitcoin is the new gold,’ and they plan to purchase more of it, instead of gold.”

The survey comes as bitcoin and the broader crypto market have seen price plunges in recent weeks. Bitcoin, priced just above $20,000 Thursday morning, is down more than 30% from two weeks ago.  

“I hear so much, ‘Why isn’t bitcoin an inflation hedge?’” said Mike McGlone, senior commodity strategist for Bloomberg Intelligence. “Excuse me, but bitcoin is one of the best performing assets in the history of mankind. When the Fed takes away the punch bowl, you have to expect it to go down.”

McGlone was alluding to the Federal Reserve raising interest rates by 75 basis points last week, marking the sharpest rate hike since 1994. The central bank also raised the benchmark interest rate a quarter percentage point in March, its first increase since 2018. 

The best hedge against inflation this year has been crude oil, McGlone told Blockworks. But he wrote in a Twitter post Thursday that crude oil “may have gotten a bit too hot within an enduring bear market,” noting that bitcoin could outperform the commodity in the second half of the year. 

The Bloomberg Intelligence strategist said despite all the talk around inflation, the bigger risk is deflation — an environment in which he expects buyers of both bitcoin and gold to do well.

“Most astute investors realize you’ve got to have some bitcoin in that bucket or you’re risking holding an analog asset in a world that’s going digital,” McGlone said.

A quarter of those surveyed by Paxos bought gold for the first time in 2020 or later. Gold ETFs and physical gold-allocated bars are the preferred method to buy gold, as 29% reported purchasing the asset in each of those formats. 

The number of people investing in gold ETFs differs by generation, as 60% of people aged 18 to 34 have invested in them, while 45% of those over the age of 44 opted for ETFs. 

State Street Global Advisors’ SPDR Gold Trust (GLD) — the largest gold ETF with $62 billion in assets — is up about 1% so far this year, as of June 17, according to ETF.com.  A spot bitcoin ETF has not yet been approved in the US, though the SEC is set to rule on proposals from Bitwise Asset Management and Grayscale Investments within the next two weeks.


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