Some Investors See Bitcoin Better Than Gold, Morgan Stanley Says

  • Strategist says he’s getting more queries about bitcoin trade
  • Bitcoin is still an ‘immature currency,’ Tom Price says

Bitcoin’s meteoric rise is leading some investors to argue that bitcoin is a better hedge against inflation and turmoil than gold, according to Morgan Stanley.

Tom Price, a London-based equity strategist, said he’s been fielding more cryptocurrency questions after prices recently soared past $4,000 a bitcoin, a fivefold increase from November 2016. Both bitcoin and gold offer similar benefits as a store of value, such as being fungible, durable, portable, divisible and scarce, but it’s too soon to call bitcoin a superior investment, he says.

"Over millenia, gold has demonstrated its ability to endure and preserve value under all circumstances," Price said in an Aug. 14 report. "By contrast, bitcoin’s global platform literally requires the lights to stay on."

Read more: Bitcoin Is Literally Soaring Into Space After Rocket-Like Surge

The enthusiasm for bitcoin has reached a frenzy in recent weeks as more companies roll out improved trading technology. Earlier this month, a plan to move some data off the main network was activated in an effort to quicken trade execution and broaden access, helping to fuel the optimism.

By comparison, moves in gold have been muted. Prices are approaching $1,300 an ounce after climbing 11 percent this year on the back of a weaker dollar and worries over heightened military tensions between North Korea and the U.S.

Morgan Stanley’s Price said bitcoin is closer to a fiat currency than commodity and a good medium for money transfers because of cheaper transaction costs.

While gold has been slowly marginalized by the rise of fiat currencies over the centuries, a lot of time and trust-building will be needed before it becomes clear whether bitcoin will also undermine demand for the metal, he said.

“The popular view that this immature currency is superior to gold as a hedge against inflation/uncertainty, still needs to be tested,” Price wrote.

— With assistance by Eddie Van Der Walt

    Before it's here, it's on the Bloomberg Terminal.
    LEARN MORE