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As Bitcoin reached fresh all-time highs in recent weeks, an increasing number of speculators dubbed it the “new gold.” 

Bitcoin and other digital currencies may offer some of the same advantages as gold. They are alternative value stores that exist outside of the banking system. Cryptos, on the other hand, are a far away from actual money. And recent market behaviour may be symptomatic of why. 

Bitcoin values plummeted over the weekend. Bitcoin fell from just around $57,000 to a swing low of little more than $46,000. That’s a $10,000 loss in only a few days! 

Speculators may be asking if it is safe to re-enter the Bitcoin market now that it has made a minor recovery.

The explanation is that cryptocurrency markets are fundamentally speculative. 

While they still have considerable upside potential. They also have infinite downside risk due to the lack of any visible use that may create a fundamental bottom for demand. 

Hard assets, such as gold, will hold their worth over time regardless of whether speculators push or pull prices in the short term. The yellow metal has been battered in recent weeks. But its losses have been far less severe than those experienced in Bitcoin. 

For thousands of years, gold has been utilised as a kind of currency. For generations, the golden metal has been regarded as a trustworthy store of money and a defender of value. Gold is treasured by monarchs and slaves alike. It communicates a similar monetary language to its possessor.

This is in contrast to Bitcoin, which has only been in circulation for a few years and has yet to demonstrate its dependability under stress. 

Despite the distinctions between cryptos and regular fiat currencies, they are still fundamentally unbacked assets. 

Having Bitcoin does not provide you with anything. While cryptocurrency may be immediately traded for something physical at a store that accepts it. Most crypto holders merely hold (or “hodl”) in the hopes of appreciation. 

The contrasts between gold and cryptos become more generally recognised and observable. They are unlikely to follow a similar market path. Bitcoin has huge short-term profit potential. It may however, be a roller coaster ride that can shock even the most daring investors’ nerves.

Gold, on the other hand, is unlikely to endure Bitcoin’s huge price movements. 

Gold has a relative smoothness. It may be a more feasible portfolio diversifier for people trying to safeguard their wealth and buffer against increasing inflation. 

Cryptocurrencies’ tremendous volatility makes them inappropriate for the more cautious investor.