The global market conditions feel on the edge as the US inflation crisis hints at an upcoming recession. Nonetheless, the Fed anticipates more interest rate hikes in 2023 which makes this fear more valid. As a result, many investors think it’s time to dump riskier investments and return to traditional assets like gold and silver.
In this article, we will compare the performance of these investment options during previous financial crises to determine whether they should be held or not.
Bitcoin vs Gold vs Silver
Source-Tradingview
The global market triggered a bear market in November 2021 and tumbled several financial markets significantly. As a result, the Bitcoin price faced a similar fate and plunged 72% from its all-time high of $68,789. Furthermore, the coin price currently trades at $19277 and is trying to sustain above the demand zone of $18500.
Moreover, during the coronavirus breakout, the Bitcoin price showcased a sudden bloodbath in March 2020. Thus, the coin price fell from $10500 to $3900, registering a 63% loss.
Furthermore, the Bitcoin price witnessed another 83.3% downfall during the 2018 economic crisis.
Source-Tradingview
If we observe the aforementioned event on the XAU/USD chart, it shows the Gold price has sustained its value despite the economic crisis. One reason for this behavior is that investors often buy these traditional assets as, historically, they have proven to retain their value. In addition, this psychology has sometimes appreciated this asset class while others were on red flags.
Thus, the gold price rallied for five consecutive months while the other markets fell in November. During this period, the XAU/USDT pair showcased a 17.7% jump from $1750 to $2069. However, during the covid-19 sell-off, the gold price dropped 14.72% from $1706 high to $1450.
Furthermore, the Gold price was majorly in a sideways trend during the 2018 fall. Moreover, any losses experienced during this time eventually recovered over the years.
Source-Tradingview
After analyzing the XAG/USD chart, we see that the silver price has reacted similarly to the Gold price. However, some percentage differences may act as a decision-making factor for investors.
During November 2021, while the gold price rose 17.7%, the silver price rallied 25% concerning the low($21.4) and high($27) of the following five months.
During the coronavirus breakout, the XAG/USDT price slumped from $17.5 to $11.7, registering a 33% loss. However, the post-correction rally accounted for 155% growth as silver price hit a high of $29.8, whereas gold showcased a 40% bull run as it reached the $2030 mark.
Similar to gold, the silver price experienced a sideways rally, but during their post-correction rally, the gold price showed a 70% rally where the silver registered 40%.
Note- during the post-covid rally, the Bitcoin price rallied 1600% and reached a high of $65000, whereas, after the 2018 fall, which plunged prices to $3200, the coin showed a bull run to $14000, registering a 330% jump.
Conclusion
Thus, it depends on personal risk and reward appetite for holding any of these assets. During the recession, when the major financial market witnessed terrible losses, the Gold and Silver prices showcased minimal losses. Thus, during weak economic times, faint-hearted investors should avoid risky assets and may invest in gold or silver.
Having said that, the above analysis shows the crypto and stock market offer maximum gains during the bull market.
The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.
Source: https://coingape.com/gold-silver-or-bitcoin-best-asset-to-buy-amid-recession-fears/