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Note: Low and High figures are for the trading day.

Note: Low and High figures are for the trading day.

Note: Low and High figures are for the trading day.

Note: Low and High figures are for the trading day.

Note: Low and High figures are for the trading day.

Note: Low and High figures are for the trading day.

Overnight index swaps are pricing in a less than even chance (18.8%) of an RBA rate cut at next weeks interest rate decision AUD

Called it – EURUSD broke the October uptrend and is now trading on the edge of support at around 1.1073:

LIVE IN 30 MIN: Join Analyst @ddubrovskyFX as he discusses traders positioning as a key element of market analysis to determine the prevailing and future price trends. Register here:

(Asia Pacific AM Briefing) Japanese Yen May Rise as the US Dollar Reversal Speeds Up in Asia $USDJPY USD Fed –

Oil – US Crude IG Client Sentiment: Our data shows traders are now net-short Oil – US Crude for the first time since Sep 16, 2019 when Oil – US Crude traded near 6,177.00. A contrarian view of crowd sentiment points to Oil – US Crude strength.

has been able to generate a relatively favorable environment for emerging economies.

This line from Brazils central banks meeting minutes (BCB) helps explain why weve seen a rally in emerging markets Regarding the global outlook, the provision of additional monetary stimulus in major economies, in a context of economic slowdown and below-target inflation…

The$NZD is back on the offensive and may extend gains versus its US counterpart before sellers reassert the dominant downtrend. Get your $NZDUSD market update from @IlyaSpivak here:

Join @ddubrovskyFX s webinar at 8:00 PM ET/1:00 AM GMT to find out what information you can gain from knowing what other traders are buying or selling. Register here:

Bitcoin vs Gold: Top Differences Traders Should Know

Bitcoin(BTC) orgold? For traders, the two are very different markets to focus on; Bitcoin is a peer-to-peer decentralized digital currencyfirst mined in 2009, while the precious metalgold, very much a tangible asset, has been highly valued for millennia.

Considering the key differences between Bitcoin, one of themajor cryptocurrencies, and gold,enablestraders to make informed decisions and capitalize on price movements. The main differences include volatility levels, storage procedure, and sources of demand.

There are similarities too, such as the scarcity of each there can only be 21 million bitcoins, while there are around 180,000 tons of themajor commoditygoldinthe world according to recent estimates. Other factors, such as Bitcoin and golds utility as currency, are disputed. Here well look in more depth at the key differences people should consider to be ready to trade in Bitcoin or gold.

One of themost importantdifferences betweenBitcoin and gold is thevolatilityof the two assets. A useful measure of volatility is theaverage true range (ATR), whichdescribes how much a market moves, on average, over a specified time. The ATRsused inthe charts below are from 2016, with each circled portion giving theaveragerangeofprice movementover the previous14 days.

Bitcoin and Golds ATR as a Percentage of Price

The ATR forBitcoin, expressed as a percentage of price, isshown to bea lot higher when compared to gold. Furthermore, the chart comparesBitcoin to gold whengold was volatile andBitcoin experienced low volatility.Thus, we can conclude that,most of the time, Bitcoin tends to move further distances,creating more opportunities than gold.

In2017Bitcoins volatility was demonstrated to exciting effect, rising from $1,151 to$19,783between January and December. It thenplunged to $5,951 by February 2018,before rallying again to $11,537 over a matter of days, with more dramatic spikes to come over the year.

Golds pricehas seen a much less volatile journey in recent years;since 2013 the price has held fairly consistently at around $1,225 ranging between $1050 and $1400(as of November 2018).Indeed, in 2017, there wasnt a single trading day during the year when gold ended more than 2.5% higher or lower than it had ended the previous day, an occurrence that hadnt been seen since 1996.

Aseconddifference betweenBitcoin and gold is the way they are stored.As a physical asset, gold is stored in vaults, safety deposit boxes in banks and personal safes for smaller amounts. Bitcoins, on the other hand, cannotbestored in the traditional sense. Instead, what is stored is a secret numbercalled a private key, whichfacilitates the transfer ofBitcoin from one party to another. BuyingBitcoin can be extremely risky if you do not make use of a hardwareorsoftware wallet tosecureyourprivate key.

There have already beena considerable number of hacks onBitcoin exchanges that have resulted inup tofourmillion coinsbeingstolento date (Fortune, 2017).Hacks can lead to anegative impact on the price ofBitcoin, but can also provideopportunitiesfor short traders. This and other market events can be seen in the figure below,which highlightsBitcoins price sensitivity to market news and events relating tothe cryptocurrencyspecifically.

Bitcoin (BTC) Price Sensitivity to Market News

Gold, as an asset, has a 7,000-year history and its drivers of demand are easily identifiable,as can be seen in the chart below. The demand forBitcoin on the other hand, is less clear and tends to centre around price speculation, buy-to-hold strategies and the underlying blockchain technology itself.

Source: World Gold Council, Metals Focus, GFMS-Thomson Reuters

In addition to having easily identifiable sources of demand, gold tends to exhibit seasonality in its trading. Sales tend to increase in January, February, July and August when viewing average returns over a five to ten-year timespan, as can be seen in the chart below:

Seasonality in Gold Prices (2007-2017) Source: Bloomberg (2007-2017)

Recent gold prices have shown an increase in price in the first two months of the year to end off the Christmas and Chinese New Year periods. In China, gold is an integral part of Chinese New Year as locals use the precious metal to fashion zodiac symbols due to its investment value and aesthetic beauty.

The increase in price observed in July and August coincides with peak buying periods for jewelry, in particular, in India. This is because the country is one of the largest markets for gold as thecommodityis widely regarded as a symbol of wealth, and plays a central part in weddings and religious rituals.

In addition to gold having easily identifiable sources of demand, it also presents the emergence of a pattern as to when that demand is likely to pick up throughout the year. By contrast, Bitcoin does not have such a well-defined source of demand and shows no indication of seasonality.

Bitcoin and golds utility as currency is the subject of some dispute.Economistsoften describe money as having three crucial functionsthat must all be satisfied:medium of exchange,unit of accountandstore of value.

Medium of exchange istheabilityfor somethingto be used as a currency to exchange for goods and services. While not widely accepted, this description fits Bitcoin; as of November 2018 organisations that accept the cryptocurrency include travel company CheapAir, gift card company Gyft, and US-based REEDS Jewelers, with many more showing interest.

However, gold is not often used as a medium of exchange in modern economies and it is not generally considered legal tender.

To satisfy the unit of account function, a potential currency must be countable so that there is something to compare the cost of goods and services against.Unit of accountissatisfiedby Bitcoindue to the fact thatthe cryptocurrencyis divisible. Most transactions will be fractions of aBitcoin and these can go as far aseightdecimal places.

Gold can also be used as a unit of account as it is also divisible (although less easily). Its value can be related to other goods through its value per ounce in a given currency.

Store of value refers to an asset that can be set aside for future use. As it can be used in the future, it is believed to hold value overtime,as opposed to perishable goods such as milk, which is a poor store of value due to its propensity to spoil.

Sceptics ofBitcoin arguethat thecryptocurrencyhas no value and is merely worth what the next person is prepared to pay for it.Some also believe that the fact that you cannot physically touch it is consequential when ascertaining its store of value.

In conclusion, itcan be argued thatwhile Bitcoin has been used as a medium of exchange, neitherBitcoinnor goldmeet all three functionsnecessaryto be consideredmoney and therefore neither fully satisfies a utility as currency.

How do the Differences Between Bitcoin and Gold Affect Traders?

The differences betweenBitcoin and gold can affect traders in a variety of ways. Different market conditions, for example volatility and liquidity, mean that trading providers often have different stop and limit spacing requirements,margin requirements,and bid/ask spreads. Sensitivity to news and position sizing are also relevant factors to consider when trading these two markets in particular.

Stop and limit spacing:Though it is possible today trade bitcoinandgold, there are thresholds that must be maintained for the distance placement on stops and limit orders. Stop loss and take-profit levels will generally be wider for Bitcoin than for gold due to Bitcoins increased volatility. Day traders commonly use theaverage true rangeto assist them in determining where to set these orders.

Margin requirements:Margin requirements set by the broker will typically be higher for bitcoin compared to gold because BTC is more volatile, so traders should consider this when deciding how much leverage to use.

Bid/Ask spread:Volatile markets tend to experience wider spreads and the same is true for Bitcoin versus gold. Thespreadfor BTC is significantly larger than that of gold as Bitcoin is significantly more volatile. The increased spread represents an increased transaction cost so a Bitcoin trader will need to factor that into their trades.

Sensitivity to news:BTC is very responsive to market news so traders should always stay up to date with news releases from ourBitcoin page. Since cryptocurrencies are a relatively new market, news about their adoption among exchanges, banks, and regulation tend to have a dramatic impact. Gold will also react tonewsbut its price tends to move at a slower rate than bitcoin. Gold prices tend to move in relation to global news events as risk appetite increases and wanes.

Position sizing:At DailyFX, we talk about risking less than 5% of your account value on all open trades at any point in time. Having this disciplined approach is particularly important when trading BTC in case the market moves against you. Traders that adopt this approach are better equipped to absorb losses without jeopardising their trading accounts.

Bitcoin and gold share few similarities, so their differences are not to be overlooked, particularly from a trading point of view. Gold is still regarded as a safe haven, while Bitcoin is renowned for being a particularly volatile asset.Greater volatility brings with it a need for greater risk management in the form of position sizing and well-defined stop and take-profit levels.

Accepted as medium of exchange, but no real utility as currency

If you are looking to start day trading gold or Bitcoin, you may be interested in:

Bitcoin and gold are very different assets. The cryptocurrency cant replace gold as a precious physical asset as it isnt a tangible commodity, while its volatility means it is unlikely to replace gold as a safe haven.

What Other Resources can I use When Trading Bitcoin or Gold?

When trading Bitcoin or gold, traders use a combination oftechnical and fundamental analysis. Past price action and upcomingeconomic releases, when used together, can assist traders to make informed trades. For analysis and updates on Bitcoin and other major markets, register for one of ourwebinars.

DailyFXprovides forex news and technical analysis on the trends that influence the global currency markets.

Leveraged trading in foreign currency or off-exchange products on margin carries significant risk and may not be suitable for all investors. We advise you to carefully consider whether trading is appropriate for you based on your personal circumstances. Forex trading involves risk. Losses can exceed deposits.We recommend that you seek independent advice and ensure you fully understand the risks involved before trading.

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