Over the past couple of weeks, Bitcoin has not been able to rise above $4,000. Because of this, demand for the digital asset, which was once drawing people away from traditional investments such as gold, is waning and attention is moving elsewhere.
According to Jan Van Eck, the Chief Executive Officer of Van Eck Associates, demand is moving away from Bitcoin and back to a more traditional commodity – gold.
Speaking to CNBC last week, Van Eck said: “I do think that Bitcoin pulled a little bit of demand away from gold last year, in 2017. Interestingly, we just polled 4,000 bitcoin investors and their number one investment for 2019 is actually gold. So gold lost to bitcoin and now it’s going the other way.”
In December 2017, Bitcoin peaked above $20,000. In the 12 months leading up to this, the cryptocurrency’s value managed to increase 25 times over. During the same period, gold rallied four percent.
Now, Bitcoin’s value has plummeted by 82 percent whereas gold is up by 2.5 percent. According to Tim Seymour, founder and chief investment officer of Seymour Asset Management, this move away from Bitcoin might be hard to reverse.
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“Not only have we lost all liquidity on the underlying [commodity] but truly outside of the existential blockchain argument, it’s been very difficult to argue store of value which is really what we started hearing about. Gold is a store of value and there’s no disputing that,” Seymour told CNBC.
The cryptocurrency bear has a nasty bite
The cryptocurrency market was weighed down by a bear market for most of 2018. Unfortunately for digital asset exchanges, the bear had a nasty bite.
As Finance Magnates previously reported, numerous exchanges and crypto-focused companies have had to resort to unpleasant measures to stay afloat, which mainly consisted of letting go of their employees.
Companies such as Bitmain, ConsenSys and more have slimmed down their operations by letting go of large portions of their staff. In addition, large cryptocurrency mining firms are pulling out of the industry.
In December, Japanese IT giant GMO Internet announced that it would be closing down its cryptocurrency-related business as the profitability of its mining chips was falling just like the value of Bitcoin.
Only one week later, reports surfaced that e-commerce giant DMM.com was closing down its mining business in Kanazawa, Japan.