Why are large investors and funds still so cautious about Bitcoin? At this time, no more than 1% of hedge funds have BTC in their portfolios. Sure, the lack of a comprehensive regulatory framework is a problem for many, but an equally important reason lies in the extreme volatility of the world’s first cryptocurrency.
It is worth pointing out that Bitcoin's volatility in 2019 was at a record low. Even its growth from $3000 at the start of the year to $13,800 in late spring is well within the realistic range for traditional stocks.
However, BTC is not just some altcoin – it's an uncontested leader that accounts for almost two-thirds of the total market cap. Imagine that the price of stocks such as Apple, Hilton, or McDonald's changed by a factor of four in a quarter characterized by low volatility. Not only conservative investors, but also many aggressive ones would consider it madness to invest in assets like these.
If you do this simple mental experiment, you will understand why people who are not too familiar with the realities of the crypto market are so skeptical about Bitcoin – to say nothing of altcoins.
The last drop from $13,800 to $7,900 was a cold shower for the overly optimistic, while the pessimists declared – for the n-th time - “You see! Told you so!” Nobody knows how much lower Bitcoin can go - this causes much anxiety not only to those investors who have already bought BTC but also to the much larger number of people and businesses that have been considering the idea of purchasing it.
As the BTC price kept falling, investors rapidly switched to stablecoins. For instance, at the height of the panic, the exchange rate of USDT rose to $1.1. Some particularly nervous market players were prepared to lose 10% just to get rid of their BTC quickly, regardless of the slippage. This, too, seems like sheer madness to traditional stock market professionals.
On the other hand, any fiat-pegged token has a different issue – almost zero profitability in conjunction with the higher risks, compared to a bank deposit at 0%. Of course, investors who store crypto as part of their portfolios won't exchange it into fiat. So what should they do?
In the context of the turbulence associated with the BTC and altcoin markets, as well as the zero-profitability of fiat-pegged stablecoins, the new solution from Digital Gold can kill both birds with one stone.
The price of the GOLD stablecoin is pegged to that of 1 gram of 99.99%-pure physical gold. The total number of issued GOLD tokens is equal to the amount of physical gold purchased by DIGITAL GOLD using its own funds. This gold is stored in a vault belonging to BullionStar, a precious metal storage company, located in Singapore and subject to 24/7 audit. At present, there are 7,200 grams of gold stored in the BullionStar vault. The same number of GOLD tokens (7200) have been issued onto the market. Any additional token emission is only possible once the company purchases a new batch of physical gold and delivers it to the BullionStar vault.
This means that each and every GOLD token, either owned by the company or by its investors, is 100% backed by physical gold. DIGITAL GOLD supports instant buying and selling of GOLD in its own marketplace https://gold.storage/en/market . Unlike crypto exchanges, the marketplace allows the company's customers to sell any amount of GOLD tokens at a fixed price and without slippage (here, it's useful to recall those investors who had to buy USDT at the price of $1.1).
The volatility of GOLD tokens in USD equivalent is equal to the volatility of gold prices in the global market. Considering that investors across the globe hold over $7 trillion worth of physical gold, one can say that volatility is definitely NOT an issue in the gold market.
The problem of profitability is taken care of, too. Historically, gold has been growing by 3-5% annually, following the rate of inflation. This means that the price of GOLD tokens relative to any fiat-pegged stablecoins will grow at the same rate. However, we shouldn’t only take the average historical profitability rate into account, but also the current circumstances. Central banks in leading countries keep relaxing their monetary and credit policies. Similarly, the European Central Bank has recently begun a new round of quantitative easing, while the US Federal Reserve is ready to lower the interest rate on dollar-denominated assets once again.
It's a known fact that gold prices grow much faster than average during the years when the monetary policy is eased. Indeed, everyone's favorite precious metal has already shown exemplary growth in 2019. Considering that the economic growth in developed countries is slowing down due to the ongoing trade wars, ever more experts predict that the price of gold will breach $2,000 per troy ounce next year – which will result in a 30-40% increase for GOLD tokens.
Compare this to the zero profitability of fiat stablecoins, and draw your own conclusions.
Website : https://gold.storage/ Whitepaper: https://gold.storage/wp.pdf
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