As Bitcoin has been experiencing accelerated institutional demand in recent months, one primary narrative has often stood out from the rest: a growing number of large investors can be observed comparing Bitcoin to gold and assigning it similar, if not better qualities as a store of value.
The latest to reiterate this perspective has been Bank of Singapore, a private bank operating in Asia.
As reported by the National News, the bank stated in a research note that Bitcoin could replace traditional safe-haven assets like gold. This, however, would only be possible with increased trust, lower volatility, and more regulatory clarity.
Mansoor Mohi-uddin, Bank of Singapore's chief economist, noted:
"Bitcoin is highly volatile as its rally over the past year from $4,000 to more than $40,000 and then back towards $30,000 shows. Bitcoin is also correlated with stocks and other risk assets rather than trading as a counter-cyclical safe-haven. In a financial crisis, cryptocurrencies are more likely to be dumped by investors during a market meltdown."
Mohi-uddin further voiced concern about reputational risk, stating that "government agencies need to curtail criminal activity" to reduce said risk when it comes to holding bitcoin.
That being said, Bank of Singapore's comparison between Bitcoin and gold is in line with the shift in mentality exhibited by a growing number of investors recently.
Bridgewater Associates co-founder Ray Dalio wrote on Reddit in December that Bitcoin has established itself as a "gold-like asset alternative" over the last ten years:
"So it could serve as a diversifier to gold and other such store hold of wealth assets. The main thing is to have some of these type of assets (with limited supply, that are mobile, and that are storeholds of wealth), including stocks, in one's portfolio and to diversify among them. Not enough people do that."
Dalio joins Stanley Druckenmiller and Paul Tudor Jones as prominent macro investors that see Bitcoin as a potential alternative to gold.