Bitcoin fell about 30 percent in just 30 minutes this Thursday. Gold plunged nearly 3.65 percent at the same time. Which asset lost more? Of course, Gold.
The above statement was made to catch the attention of Mr. Peter Schff (Hey!), a famous gold bull, and among the few analysts that predicted the 2008 financial crisis when other white collars were ignorant.
Mr. Schiff, who serves US-based Euro Pacific Management as its chief executive, is also a staunch bitcoin critic and hates it when millennials treat the cryptocurrency as a better version of gold.
That explains why the yellow metal lover felt exhilarated after bitcoin plunged more than it while competing for the best safe-haven asset tag against the rising Coronavirus pandemic. He took to his Twitter profile to pat himself on the back, telling his 191,200-something followers about how he was right about the cryptocurrency’s doomed future all this time.
“The air continues to come out of this bubble,” Mr. Schiff taunted the bitcoin community, probably grinning behind the computer screen as he typed. The analyst later bashed CNBC for – WTF – pumping the bitcoin price with non-stop daily coverages whenever it goes up and for staying mum when it goes down.
And then came the tweet as sensible as Fox News projecting Coronavirus as “another attempt to impeach” Donald Trump. It read:
Sure #gold is down 2.5% today, but #Bitcoin is down 25%, or ten times as much. Is this really digital gold?
— Peter Schiff (@PeterSchiff) March 12, 2020
But looking into it, the tweet is an outright lie.
Yellow Metal Lost Roughly $215bn Today
Drop a stone into a lake: that is what bitcoin is in comparison to the size of the gold market. Thompson Reuters GFMS wrote in a report published back in 2013 that there are about 5.482 billion ounces of gold in the entire world. At the pre-crash rate, that takes the yellow metal’s presumed market capitalization to about $8.6 trillion.
Bitcoin, on the other hand, was sitting atop a $144.72 billion market valuation before the crash.
Mr. Peter Schiff conveniently projected bitcoin as an asset that lost more than its traditional counterpart gold: based on percentages. In reality, the cryptocurrency’s 25 percent plunge wiped about $36 billion off its market, but for gold, even a 2.5 percent loss trimmed the market cap by around $215 billion.
Gold plunges https://t.co/t5Y1zEa8b2 pic.twitter.com/g1FbUNlt5D
— Bloomberg Markets (@markets) March 12, 2020
It does not mean gold is bad – or investors were keen to dump the yellow metal because they didn’t think it was safe-haven – but it simply means that Gold has more people speculating on it. In comparison, bitcoin is a very, very small market, with a lesser number of people.
Debunking the Anti-Bitcoin Tweet
Mr. Schiff wants to show percentage-losses as a benchmark of an asset’s performance, without ever considering other parameters that may influence the outcome drastically. Both Gold and Bitcoin lost hard because investors wanted something else as their safety in times of a health crisis: fiat. Hence, the money moved out of so-called safe havens into the low-risk bonds.
Bitcoin had to fall harder, nevertheless, but because it was sitting on better profits than gold, especially against the COVID-19 crisis that has left no market for investors to profit from. But to say it lost the “digital gold” narrative is an insult to Gold itself, a long-standing insurance asset.
Peace to the wonderful future for both gold and bitcoin bulls! As they say in Sanskrit, Sarve Bhavantu Sukhinah, which translates to ‘May all become happy.’
So does you, Mr. Schiff, so does you!