Crypto Crash Sparks Rush into Gold

The crypto crash earlier this week sparked a run to gold.

Regulatory concerns set off the panic. Bitcoin fell below $10,000 for a time, and other cryptocurrencies saw precipitous drops. Crypto markets appeared to have stabilized Thursday morning, with Bitcoin back up over $11,000.

The sudden plunge served as a reminder of the extreme volatility in the cryptocurrency markets. Bitcoin has seen swings of $10,000 over the last three months. As Bitcoin’s price fell through the floor this week, some investors sought out the stability and historical safe haven of gold.

Frankfurt, Germany, based CoinInvest director Daniel Marburger told Bloomberg his gold coin sales increased five-fold as cryptos tumbled. He said his company sold almost 30 kilograms of gold, worth $1.2 million on the spot market as Bitcoin plummeted on Tuesday.

Yesterday was a hell of a crazy day. Emails and phones did not stand still with customers asking how they could turn their crypto into gold.”

GoldCore Ltd. director Mark O’Byrne told a similar story. He said sales of both gold bars and gold coins skyrocketed as cryptos dropped. He said many customers expressed concern about the volatility in crypto markets.

They told us they were concerned that the massive price appreciation was unsustainable and they got nervous about it. We think increasingly people are realizing that these digital assets have much higher risk levels than the traditional safe-haven asset.”

Bullion dealer Sharps Pixley, a subsidiary of Europe’s largest precious metal coin and bar outlet, also saw robust sales.

London gold dealer Ross Norman started exchanging gold for Bitcoin about three months ago. He said many of this customers are as young as 25. They come in carrying laptops holding Bitcoin they accumulated when it was trading at as little as $1. Norman said he doesn’t hold Bitcoin himself; he facilitates the trades through an intermediary.

Bitcoin is a bit of a lobster pot — it’s easy to get in, but hard to get out. Gold also offers investors 4,000 years of history as a store of value, and that’s looking quite appealing right now.”

Marburger pointed out gold bullion holds appeal for crypto fans because there are many similarities between precious metals and digital currency.

Both are limited in quantity, easy to trade and you can store them decentralized,” he said. Gold has advantages because there are “no passwords you can lose, the volatility is much lower, sustainable growth and in the end, you can hold your investment in your hands.”

The rush into gold doesn’t mean investors are abandoning cryptocurrencies. It may well be more of a move toward diversification. After all, there is no reason you can’t hold both cryptocurrency and gold. Diversifying a cryptocurrency portfolio with precious metals can help mitigate some of the potential downsides and put investors in an overall stronger financial position. No smart investor would put all of their money into a single stock, or one kind of bond. It’s never a wise move to put all of your eggs in one proverbial basket.

At SchiffGold, we recommend this kind of diversified approach to investing in Bitcoin. Buying gold and silver is a great way to diversify your cryptocurrency portfolio. You can even buy gold and silver with Bitcoin.

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