Monetary Metals: The Knockout Blow to Crypto
Cryptocurrency adoption continues at a rapid pace. Most recently, the UFC has started paying fan bonuses to its fighters in Bitcoin. While it’s not a full cryptocurrency standard, it’s a sign of how quickly the concept has become mainstream.
It’s also a sign that cryptocurrencies are an asset class that need to mature. That’s because the space has been wildly volatile generally. A slowdown in extreme volatility could help accelerate crypto’s adoption.
Right now, the current extreme moves in cryptocurrencies make the space a gamble. Fighters who have won a bonus in Bitcoin have seen their value cut by more than half in the past year.
Dollars aren’t doing any favors right now either. Inflation runs at nearly 9 percent annually right now. And with a goal of “just” 2 percent inflation, the value of the dollar is set to decline over time.
One potential solution is gold. Over time, the metal has a history of holding its own against inflation. And, yes, it can prove volatile as well. But with an annualized standard deviation of 17.3 percent compared to Bitcoin’s 139 percent.
For those looking for growth, Bitcoin looks like the clear winner. But for those looking for stability, gold still has the edge for now.