Bitcoin is not replacing gold anytime soon, according to Garner and Cramer on Mad Money
Jim Cramer and futures broker, Carley Garner, looked at the charts of Bitcoin and gold on Mad Money on CNBC.
"Bottom line? Look, I know the jaw-dropping run in bitcoin has been very exciting," Cramer said. "But gold is not being supplanted by bitcoin as the go-to alternative to actual currency, and the charts, as interpreted by Carley Garner, suggest that gold might be ready to make a comeback. And while I won't discourage anyone from buying bitcoin — just know the risks, know your limitations — I'm with Carley when it comes to the precious metal, not the precious keystroke." - Jim Cramer
Bitcoin is all the rage, but in the long run, it might be more bark than bite. Although the technology of blockchain and cryptocurrencies will live on, the way the financial markets have pinpointed Bitcoin as the end-all-be-all for the complex is arguably flawed logic. The cryptocurrency idea is less than a decade old and will undoubtedly experience growing pains. Many believe Bitcoin is the start of a new era capable of changing society in a manner similar to the internet. How soon we have forgotten the struggles of technology pioneers. Remember Pets.com?
Considering the mania, it is hard to believe Bitcoin was created as an experimental currency and involves the practice of solving math equations to “mine” the asset. Since when does doing algebra instantly create a valuable asset? Further, Bitcoin was never intended to be an investment vehicle and would likely prove to be less value able than just about any tangible asset on the planet should the world undergo a calamity. In short, it’s astronomical value is the result of perception not reality. This isn’t a new concept in the financial markets, but we’ve never seen emotions get this out of hand.
Some argue these characteristics are no different than those of gold; that is a reasonably true statement. I’ve always had reservations regarding the practicality of gold being an efficient medium of exchange, but the truth is it has been used by mankind for millennia. More importantly, the gold market is extremely deep. Investors in gold bullion, casual collectors, technology manufacturers, and those valuing its beauty, are all holding a piece of the pie. The Bitcoin market, on the other hand, is believed to be largely owned by roughly 1,000 market participants with uninformed retail traders scrambling to bid up the price of scraps. In our opinion, and according to the charts, Bitcoin is not a viable replacement for gold...yet.