In the commodity market, gold and bitcoin are now two standout options. On Tuesday, the total volume in the last seven days of Bitcoin ETF trading almost touched $19 billion. While both offer unique avenues for investors, let’s dive into the difference between these two exchange-traded products.
Gold ETFs are considered safer
Gold ETFs are commodity funds that are backed by the yellow metal. However, investors only get exposure to the price of the precious metal through this option. Which means no physical ownership gets transferred in the process.
Gold and Gold ETFs are traditional options and have been around for longer. It dominates a mature market that provides a relatively stable investment option.
Gold is often seen as a safe haven during economic distress. Which makes gold a hedge during periods of market volatility. It also preserves monetary value during inflation and currency devaluation. Gold ETFs are regulated funds for conservative investors to diversify their portfolios into commodities.
Bitcoin ETFs are investments into emerging tech
Bitcoin ETFs, on the other hand, represent an emerging and more volatile investment option. These regulated funds also track the spot price of bitcoin. Some might argue that bitcoin’s value isn’t tied to a tangible asset, unlike gold. However, proponents see billions of dollars in capitalization and a decentralized computing system of bitcoin as part of its valuation.
Conservative investors might not dive into the more volatile asset class. Bitcoin ETFs can experience dramatic price swings as it is tied to a highly speculative crypto asset. Therefore, only investors with a high-risk appetite would invest in Bitcoin ETFs. Bitcoin has also generated high rewards and diversification benefits, albeit with a higher risk of loss.
Contrarily, Gold ETFs tend to be less volatile, mirroring the relatively stable price of gold.
Therefore, investors need to choose their investment vehicle according to their risk-return profile and financial goals. Both gold and Bitcoin ETFs offer unique opportunities.
Also Read:Â Gold Vs Bitcoin: Which Investment Offers Better Returns?
The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.
