Bitcoin Investors Are Abandoning Crypto for Gold during the Bear Market: Vaneck CEO

Bitcoin investors are abandoning crypto in favor of traditional commodities like gold amid the prolonged market slump. That’s the observation of Jan Van Eck, the CEO of investment management firm VanEck Associates.

Van Eck says this is a reversal of the trend he saw in 2017, when the then-sizzling bitcoin pulled demand from gold during the crypto bull market.

“I do think that bitcoin pulled a little bit of demand away from gold in 2017,” Van Eck told CNBC (video below). “Interestingly, we just polled 4,000 bitcoin investors. And their No. 1 investment for 2019 is actually gold. So gold lost to bitcoin [before], and now it’s going the other way.”

‘Bitcoin Sucked the Life Out of Gold’ In 2017

Tim Seymour, the founder of Seymour Asset Management, agreed. “There’s no question that bitcoin sucked life out of the gold market [in 2017].”

However, Seymour says bitcoin has its limits as a long-term investment because it’s so volatile and is not a store of value.

“Not only have we lost all liquidity in the underlying [commodity], but truly outside of the existential blockchain argument, it’s been very difficult to argue [that bitcoin is a] store of value. Gold is a store of value, and there’s no disputing that.”

If gold is climbing, this is good news for Jan Van Eck, because his firm launched the first gold equity fund in the United States back in 1968. And in 2016, it rolled out the first gold miners ETF.

An informal Twitter poll conducted by Gabor Gurbacs ― VanEck’s director of digital strategy ― indicates that 41% of the almost 5,000 people who voted in the survey plan to invest in gold and other commodities in 2019.

VanEck Plans to Refile Bitcoin ETF Application

Separately, Jan Van Eck said he decided to withdraw VanEck’s bitcoin ETF application last week due to the 35-day US government shutdown. He thought it was wiser to withdraw the application than have it get rejected.

He also conceded that the SEC had concerns about VanEck’s inability to solve the custody problem and the fact that most bitcoin is priced overseas. However, Van Eck plans to re-file its bitcoin ETF application once the SEC resumes normal operational capacity.

“We will refile and re-engage in discussions.”

On January 25, President Donald Trump signed a temporary spending bill that will reopen the government until February 15. After that, if Trump and Congress are still unable to negotiate a solution for border wall funding, it’s possible (though unlikely) that another shutdown could occur.


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Author: Samantha Chang 
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Scientists Turn Copper into ‘Gold’ — Will Bitcoin Replace as Store of Value?

According to a new paper published in a peer-reviewed scientific journal, researchers in China have made a groundbreaking discovery that could profoundly impact the face of the precious metals landscape — and provide bitcoin with an opportunity to shine.

Scientists Turn Copper into Substance ‘Almost Identical’ to Gold

Per SCMP, a team of scientists at the Dalian Institute of Chemical Physics at the Chinese Academy of Sciences in Liaoning have developed a method to turn cheap, plentiful copper into a substance that is “almost identical” to gold, accomplishing what alchemists have for hundreds of years believed could be a gateway to endless riches.

Lest anyone protest that this sounds like something out of the National Enquirer or one of the more fantastical medieval travel narratives, the study was published in the peer-reviewed journal Science Advances, and the methodology relies on chemical reactions rather than secret incantations.

To create the pseudo-gold, the scientists shot a payload of hot, electrically-charged argon gas at a target made out of copper. The ionized gas particles dislodged copper atoms from the target, and these atoms fell onto a collecting device where they cooled off into a pile of microscopic sand — each grain just a few nanometers in size.

The scientists then tested the properties of these copper particles by using them as a catalyst in a chemical reaction to turn coal into alcohol. Confirming their research, they found that the nanoparticles “achieved catalytic performance extremely similar to that of gold or silver,” Sun and the other researchers wrote, explaining that it can resist high temperatures, oxidization, and erosion much better than standard copper.

Will Bitcoin Replace Gold as Store of Value?

Bitcoin price (blue) vs. gold price (orange) over the past five years.

This scientific development raises the question of whether the gold standard of economic hedging could soon lose its luster, forcing gold bugs and other stock market bears to turn to alternative assets. Could this give bitcoin an opening to become a mainstream store of value?

Though proponents frequently cite bitcoin’s utility as a successor to the yellow metal, the answer remains no, at least for the foreseeable future.

Sun and the other researchers explained that, at least in its current incarnation, the process could not practically be used to create counterfeit gold coins or bars since its density remains the same as normal copper.

Nevertheless, anticipating future improvements in the methodology, ordinary retail investors who purchase precious metals for speculative purposes could be taken in by this pseudo-gold if significant quantities ever exit the industrial sector and are repurposed by counterfeiters. This would exacerbate a longstanding problem in precious metals investing, potentially weakening consumer trust in bullion as a store of value.

Moreover, even the production of this pseudo-gold for its intended purpose — industrial applications — could have a significant impact on the value of the true yellow metal. While the vast majority of gold demand is speculative, the material also plays an important role in the production of electronic devices, a fact that crypto skeptics often cite when objecting to the thesis that bitcoin is “digital gold.”

At the very least, the material’s replacement in industrial manufacturing should place equivalent downward pressure on the gold price, though it’s likely that psychological factors would further weaken investor confidence and steepen the asset’s decline.

Consequently, this and other new threats to gold demand, coupled with future improvements in cryptocurrency adoption and technological development, could over the long term provide a gateway toward bitcoin finally becoming a real store of value rather than just a moonshot purchase.


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Author: Josiah Wilmoth
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Bitcoin Will Not Challenge Gold as a Safe-Haven Asset: Equity Analyst

Though many bitcoin investors believe multi-layer scaling solutions such as the Lightning Network (LN) will eventually make BTC a viable payment instrument for the proverbial coffee purchase, most argue that the flagship cryptocurrency’s primary short-term use case is as “digital gold.” However, an equity analyst at one of the world’s most respected investment research firms said that he doesn’t expect bitcoin to make a noticeable dent into the yellow metal’s market share.

Analyst: Bitcoin Won’t Steal Gold’s Shine

Writing in Morningstar Research Services’ short-form investment commentary series, the “Morningstar Minute,” equity analyst Kristoffer Inton noted that if bitcoin did begin to replace gold as a safe haven asset, it would represent a “seismic shift” in the investment case for the precious metal as 40 percent of gold demand comes from investors.

“If cryptocurrency were to displace gold’s investment case, the implications for gold prices would be devastating. 40% of gold demand relates to investment, so a shift in investment from gold to cryptocurrency would be a seismic shock.”

However, Inton, who has been at Morningstar since 2013, wrote that the firm has created a proprietary framework for evaluating assets as stores of value and found that cryptocurrency does not score well on this rubric, leading him to continue recommending long-term investments in certain gold stocks, including Goldcorp.

“In order to assess the threat, we’ve created a framework to grade any asset class’s viability as a safe haven by focusing on liquidity, functional purpose, scarcity of supply, future demand certainty, and permanence. Through this framework, we conclude that cryptocurrency does not and will not challenge gold as a safe-haven asset class.”

The Case for ‘Digital Gold’

Bitcoin vs. Gold

Nevertheless, cryptocurrency bulls maintain that bitcoin does have a solid investment thesis as “digital gold” because, although it is currently quite volatile, it possesses many of gold’s attractive features (e.g. liquidity and scarcity) while also alleviating some of its drawbacks, such as its lack of portability and impracticality for payments.

Billionaire investor Peter Thiel, for instance, said earlier this year that he is long on bitcoin, even if it never matures as a payment instrument.

“I would be long bitcoin, and neutral to skeptical of just about everything else at this point with a few possible exceptions. There will be one online equivalent to gold, and the one you’d bet on would be the biggest,” he said. “I would be long bitcoin, and neutral to skeptical of just about everything else at this point with a few possible exceptions. There will be one online equivalent to gold, and the one you’d bet on would be the biggest.”

Featured Image from Shutterstock. Charts from TradingView.


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Author: Josiah Wilmoth
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Bitcoin Will Supplant Gold as the Most Trusted Store of Value: VC Lou Kerner

Gold has been the global store of value for thousands of years, but one cryptocurrency-focused venture capitalist thinks bitcoin will eventually capture that mantle.

LIONBIT

Lou Kerner, co-founder of CryptoOracle, which provides cryptocurrency advisory services and operates a venture fund focusing on decentralized technologies, believes bitcoin offers something “much, much better” and will take gold’s place as the top store of value, he noted on a recent CNBC interview.

It may take as long as five years or more, but Kerner said he expects people using gold as a store of value to switch to bitcoin.

Is ‘Nervous Money’ Exiting Bitcoin?

Kerner’s views about bitcoin’s attributes are amongthe reasons being cited by cryptocurrency enthusiasts, who maintain the cryptocurrency’s future is bright despite the price decline that has occurred. The interviewer noted that Brian Kelly, another cryptocurrency fund operator who is also a CNBC contributor, recently said the “nervous money” could be exiting bitcoin – those who recently purchased it but can’t handle the volatility.

Kelly, founder of BKCM and a contributor to CNBC’s Fast Money, said in May that the adoption of cryptocurrency by financial institutions like the New York Stock Exchange and Goldman Sachs would cause the cryptocurrency market to surge in the short- to mid-term. When bitcoin’s price surpassed $8,000 in late July, Kelly said the rally would be long-lasting, which proved incorrect.

TIP

Volatility To Be Expected

Asked if he agrees with Kelly about “nervous money” leaving the cryptocurrency market and if such a development is healthy, Kerner said volatility is to be expected for a new asset. He said new assets have come such as junk bonds 40 years ago which were also very volatile.

“Forty years later, it’s the same as everything else,” Kerner said of junk bonds. “We think bitcoin is just going along that same structure.” Any new asset in its early days is extremely volatile, he said.

“Nobody knows how to price it, and that’s exactly what we’re seeing with bitcoin,” he said.


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Author: Lester Coleman
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Bitcoin [BTC] has niche investors, Apple and Twitter CEOs invest!

During an interview with CNBC, Apple co-founder, Steve Wozniak calls Bitcoin [BTC] ‘pure’. In addition to this, Steve also mentions that he is not a Bitcoin [BTC] investor but only bought Bitcoin [BTC] to experiment.


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Steve Wozniak talks about how much he is intrigued with Bitcoin and mathematics. He also mentioned that he currently owns one Bitcoin and two Ether. He also constantly emphasizes on how similar Bitcoin is to the internet and expects Bitcoin to bring across the revolution internet has brought across.

The Apple Co-Founder talks about his strong belief in mathematics, purity, and science as defining the world. According to him, Bitcoin is mathematically defined as a circle and there’s a way that it’s distributed. He considers Bitcoin [BTC] pure as there’s no person or company running it despite which it continues to grow and survive and this to him is ‘something that is natural… and more important than human conventions.’
He also says that the main reason he sold his $700 BTC was due to the overwhelming price fluctuations in the market. He says:
“I never invested in Bitcoin, I was actually a little worried. Once, all of a sudden the price went up and I had a lot of money in Bitcoin, I said, wait a minute, I only bought to experiment.”

When asked whether Bitcoin will continue to dominate the market with the rise of other platforms like Ethereum and Ripple, he replied:

“We’ve seen a hundred sort of Bitcoin copies, some are faster, some are centralised control, some have other advantages, only Bitcoin is pure digital gold… I totally buy into that…How the math on Bitcoin that it was so correct that it still works.”


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He also talks about Bitcoin [BTC]’s price in the future and says that because of Bitcoin’s regulated quantity, the value is down to the demand and supply, and Bitcoin saw a hike to $20000 for a period because ‘more and more people want it.’ He adds:
“So if the demand increases and becomes more and more popular for more things and people start using it, there is no supply; it’s limited. In terms of dollar, yes bitcoin will go up and up in time… things might be sloppy at first and things that change that much in life take a long time to change, they tend to go slowly. We had a crash in the internet age and I see that going on with a lot of blockchain things including Bitcoin itself right now.”

Steve further says that it’s going to take about 10-15 years for Blockchain to become the next widespread technology. He compares blockchain to the internet and says that just the way internet had promised to provide so many services online like bank reservations and airplane reservations, it faced a big crash as all the companies had competed. He continues:
“And here it is, in 2018 all of our life, everything we do with these third-party apps to this day, oh my gosh, this saved me, such a wonderful world. It was the world we talked about than but it just doesn’t happen instantly because people will have to have their mind set changed, culture and tradition and status quo and the way things are doesn’t change that rapidly/ instantly when it’s that huge.”


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Author: Simran Alphonso
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Top Reasons Why Bitcoin (BTC) Is Better Than Dollar and Gold

The rise and rise of Bitcoin (BTC) has led to an incredible increase in interest in this digital currency. Apart from those seeking to know how they can invest in it, there’s a huge multitude of others who wonder what all the fuss is all about. For the latter, the main concern is that Bitcoin (and other digital currencies) don’t represent what they understand to be money or value- fiat and gold.

Bitcoin certainly has its own disadvantages when compared to the dollar and gold, but are there solid reasons that put it on top? The answer is yes. Here are some of the many pros of Bitcoin over fiat currencies or the gold standard.


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Bitcoin empowers the people not the banks

Basically, Bitcoin gives the user the power over their funds and since no one controls it, no one else has power over it. It’s unlike gold and the fiat, which are under the control of established financial bodies like central banks. We could say Bitcoin’s power comes from the fact that its supply and use can’t be manipulated.

There are of course instances when rogue traders can manipulate prices by illegal trading tactics. However, that will soon come into check when Bitcoin’s inbuilt scarcity means no one would hold huge amounts, enough to dump on the market. Bitcoin’s deflationary nature means that prices will increase on the principle of supply and demand.

Bitcoin better as a currency

One of the main disadvantages of the current system of money- whether the fiat currencies or the gold reserves- is that they are too slow. Bitcoin beats these forms of transactions for speed. You can send or receive millions of USD for instance within seconds using Bitcoin’s blockchain technology. The opposite is what happens with fiat currencies like the dollar.

Moving huge sums of money from one bank to another or even from an individual’s account takes hours to days, depending on the amounts involved. In addition, the transactions can be costly, often at the expense of those that were to benefit from the money.  All the while, issues of privacy and security are compromised- banks will demand identification and very huge sums of money attract suspicion.

With Bitcoin, money moves fast, less costly, and without the bureaucracy or privacy infringements of fiat-based transactions. Furthermore, Bitcoin transactions are tamperproof and records remain intact forever, as explained below.


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Bitcoin (BTC) beats the dollar and gold on transparency

The blockchain is open-source and anyone on the network can take part in the transaction process, or check records to verify them. The same cannot be said of fiat and the precious metal. The public may not have a clue to the inner workings of the controlling bodies. It’s not easy to tell what the Federal Reserve can be up to, or whether what we have in circulation is really the total amount of gold there is.

Changes to the fiat or gold supply may not be verifiable, but as for Bitcoin, any change to the code is reached via consensus. The world can suffer economic challenges on the whims of a few when it comes to fiat or gold being the accepted forms of money. That can’t happen with Bitcoin, it’s next to an impossibility.

Bitcoin’s public ledger helps to make accounting easy, verifies the validity of transactions, and is essential in preventing counterfeits. These pros are not tamper-proof in relation to fiat currencies or gold.

Bitcoin provides better security compared to the Dollar or gold

This may lead to a debate from some quarters, so let me put it out there clearly: Bitcoin too, isn’t 100 percent secure. However, when it comes to securing money, Bitcoin is way better compared to the fiat currencies (including gold). There are rampant cases of identity theft and counterfeit bills are common all over the world. Losing money is also far easier than losing Bitcoin- especially if the user knows what to do.

Bitcoin, as a result, provides a higher chance of preventing losses due to their digital nature. There are several ways to ensure you keep your money safe when stored in Bitcoins, especially as the world moves towards a digital age.

Cyber attacks do happen and Bitcoins have been lost before, but the rarity of the matter makes it better than traditional fiat.

Conclusion

There are several other reasons that make Bitcoin (BTC) better that fiat (the Dollar) and gold. What’s even more encouraging is that the technology behind Bitcoin is still young and will get better with time. It could eventually replace fiat as we know it.


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Oil, stocks slide on Trump’s new trade salvo

NEW YORK

Crude oil and global equity markets tumbled on Friday after U.S. President Donald Trump upped the ante in a trade dispute with China, reviving investor jitters about the impact a tariff war could have on the world economy.

MSCI’s gauge of worldwide equity markets fell more than 1 percent and stocks on Wall Street skidded more than 2 percent after Trump threatened late on Thursday to add another $100 billion of tariffs on Chinese goods.

China warned it was fully prepared to respond with a “fierce counter strike” of fresh trade measures if the United States follows through on Trump’s latest threat.

The U.S. equity rout picked up during a speech by Federal Reserve Chairman Jerome Powell in Chicago on the U.S. economy. Powell said it was too early to tell if the threatened tariffs would materialise or the effect they might have.

“What Powell is signalling to market participants is that the Fed is not swayed or rattled by equity market volatility at this point. That’s the reason for the additional selling pressure,” said Chad Morganlander, a portfolio manager at Washington Crossing Advisors in Florham Park, New Jersey.

“The Fed has the intestinal fortitude to wait until it creeps into credit conditions and causes financial stress,” he said.

The pan-European FTSEurofirst 300 index, which closed before Powell’s speech, fell 0.4 percent but ended the week 1.15 percent higher.

The STOXX Europe index of companies in 17 European countries fell 0.35 percent, with the trade-exposed auto sector the leading sectorial loser, down 1.7 percent.

Earlier in Asia, Japan’s Nikkei nudged down slightly to regain a measure of calm after an initial knee-jerk reaction to Trump’s latest tariff proposal.

Defensive stocks such as utilities or telecoms were among a handful of European sectors to end the day in higher.

MSCI’s all-country index of stock performance in 47 countries fell 1.2 percent, led lower by Apple, Microsoft, Amazon.com and JPMorgan – the same as on the benchmark S&P 500 index.

On Wall Street, the Dow Jones Industrial Average closed down 572.46 points, or 2.34 percent, to 23,932.76. The S&P 500 lost 58.37 points, or 2.19 percent, to 2,604.47 and the Nasdaq Composite dropped 161.44 points, or 2.28 percent, to 6,915.11.

The market’s decline is due more to its current vulnerable state than the prospect of a trade war, said Jim Paulsen, chief investment strategist at The Leuthold Group in Minneapolis.

“It’s got higher values; financial liquidity is contracting. You came into the year with a little too much optimism. You got rising rates going on, you got rising inflation fears,” he said.

Powell said the U.S. central bank will likely need to keep raising interest rates to keep inflation under control.

A weak U.S. unemployment report, which nonetheless highlighted underlying labour market strength, helped push U.S. Treasury prices higher as the economy created the fewest jobs in six months in March.

Oil prices tumbled, with U.S. crude falling more than 2 percent.
Brent crude futures fell $1.22 to settle at $67.11 a barrel, while U.S. West Texas Intermediate (WTI) crude futures settled down $1.48 at $62.06.

U.S. Treasury and euro zone government bond yields dipped as the trade spat raised the prospect of a full-blown trade war between the world’s two largest economies.

The yield on 10-year German government debt, the euro zone benchmark, dipped 2.7 basis points in late trading to 0.494 percent, erasing much of Thursday’s rise.

Benchmark 10-year notes last rose 15/32 in price to push yields down to 2.7753 percent.
Mike Terwilliger, portfolio manager of Resource Liquid Alternatives for the Resource Credit Income Fund, said nearly every news event seems to register on the market’s Richter scale, though investors have been dealing with some relatively weighty challenges this year.

“The recent decline in Treasuries is largely ‘Tweet related’ versus some fundamental shift in the view of inflation or economic growth,” he said.

The dollar index fell 0.37 percent, with the euro up 0.36 percent to $1.2282. The Japanese yen firmed 0.45 percent at 106.90 per dollar.

U.S. gold futures for June delivery settled up 0.6 percent at $1,336.10 an ounce.


 

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Author Herbert Lash

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