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Coinbase Economist Says The Comparison Between Bitcoin And Gold Is Not Appropriate: Know Why

Analytics

www.thecoinrepublic.com 06 July 2022 18:00, UTC
  
Reading time: ~2 m

  • An analysis done by the chief economist at Coinbase notes that the digital assets share a similar risk profile such as oil and gas. 
  • The economist also concludes that the comparison between Bitcoin, often referred to as digital gold with real gold, is not right. 
  • The economist calls the comparison of Bitcoin to Tesla, an electric car manufacturer, a more appropriate one.

A chief economist at Coinbase has conducted an analysis and has concluded that the crypto assets and commodities such as oil and gas have a mutual risk profile even though crypto has been endorsed as a hedge against traditional markets. 

Cesare Fracassi, Coinbase chief economist, shared this revelation through a blog post stating that an increase has been recorded in the correlation between the stock and crypto-asset prices since the global pandemic of 2020. 

Fracassi notes that the top crypto assets returns which for the first 10 years since its inception were on average were not connected with the stock market performance, however since the start of the pandemic it now shares a close relationship. Particularly, the crypto assets today share a similar risk profile to oil commodity prices and technology stocks.

Fracassi cited a report published in May of his institute’s monthly insights that concluded that Bitcoin and Ethereum share similar volatility to commodities like oil and natural gas and keep oscillating between 4% and 5% on a daily basis.

Prices change when outlook changes. For example, when crypto exploded from 2017-2022 it reflected a brighter outlook due to increased participation by institutional and retail investors and foundations of web3 becoming more apparent. (3/5)

— Cesare Fracassi (@CesareFracassi) July 5, 2022

According to the research, often referred to as “digital coin,” Bitcoin has historically proven to have a riskier profile in comparison to its precious metals found in the real world such as gold and silver, that record a daily volatility of 1% -2%.

The economist further added that the most appropriate comparison done with Bitcoin was with Tesla (TSLA) , the electric car manufacturer. 

While comparison between the top altcoin and  Lucid (LCID), electric car manufacturer and  Moderna (MRNA), pharmaceutical company, is most suitable based on volatility and market cap.

Fracassi stated that this led to digital assets being in a similar risk profile to conventional asset classes like  technology stocks. 


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