The debate over where to invest in 2022, whether in bitcoin or gold, continues to escalate. Goldman Sachs' commodity team suggests that the precious metal will have a bigger advantage.
It is worth noting that gold prices remain around $1,800 an ounce:
Meanwhile, Bitcoin suffered significant losses, dropping about 20% in January, marking the worst start to the year since its inception. Currently, the world's first cryptocurrency is trading below about 50% of its all-time highs in November.
Commodity analysts at Goldman Sachs said in a published report last week that the slowdown in economic growth this year will continue to put pressure on leading cryptocurrencies.
According to the analysts of this investment bank, Bitcoin is a hedge against inflation risk. However, economists believe that a long position in gold would be more effective in the current macroeconomic environment for investors who are looking for a way to hedge their portfolios against the risks of slowing growth and falling prices.
They also noted that although Bitcoin showed a record nominal return last year, the risk-adjusted market return was lower than the market as a whole.
This is due to the lack of use of cryptocurrencies outside of the digital store of value, indicating that it is still too early for cryptocurrencies to compete with gold or the US dollar as a safe-haven investment.
Nevertheless, Bitcoin has not suffered alone, as investors begin to reduce the risks in their portfolios.
The technology sector has noticeably suffered since the start of the year – Nasdaq has fallen by more than 11%.
Thursday was especially devastating for Facebook, as it fell over 20%, losing more than $200 billion in a session. The sell-off was triggered after the company reported a decrease in the number of active users per day for the first time in 18 years.
