By: Damian Okonkwo
The physical asset gold together with the Digital asset Bitcoin constitutes the most traded pair in the exchange market today. Often investors are attracted to them based on the fact that they offer quick profits arising from their strong volatile nature. While gold could jump by 400pips in a single day; Bitcoin when provoked could produce 1000pips in a single day. To this end, most Nigerian traders who are high-risk traders by nature; consider Bitcoin their favorite asset to trade today. The rate of Bitcoin traders in Nigeria today is by far greater than gold traders. Bitcoin has become the favorite asset to trade for Nigerian investors.
Similarities between Gold and Bitcoin
Volatility: Both pairs are marked with strong volatility that has endeared them so much to investors. Both assets could produce as many as 500pips movements in a day.
Store of Values: Both gold and Bitcoin are recognized means for store of values. Thus they are known means of exchange. Often investors consider them as a hedge against inflation.
Speculative Assets: Both assets have no fixed prices. Their prices are fixed daily at the market via speculations. Buyers speculate daily through fundamental and technical analysis of the possible price targets for both assets.
Can be traded as CFD: An interesting feature about these two assets is that they can easily be traded as CFD which means 'Contract for Difference'. Trading these pairs as CFDs allows the trader to profit from both the upward and downward movement of these pairs.
Differences between Gold and Bitcoin
Nature of Asset: Gold is a well-known physical that could be bought and sold in the market. However, Bitcoin is only a digital asset and has no physical correlation.
Price Regulation: The price of gold is strongly regulated by the exchange authorities against an excessive increase in price. This is different from Bitcoin whose price is not in the least regulated and has no limit to future price possibilities. This is why Bitcoin is more volatile than Gold.
History: Gold has a very long history dating back to the 19th century. Bitcoin is only recent dating back to 2010 when the first Bitcoin was mined.