Digital asset management powerhouse Grayscale kicked off May in launching a new media campaign designed to emphasize bitcoin (BTC) as a superior digital alternative to gold. The campaign’s slogan?
“Bye gold, buy bitcoin.”
Cryptocurrency proponents on social media immediately began celebrating the thrust of the Grayscale Bitcoin Trust (GBTC) creators’ PR blitz — to raise the profile of bitcoin and other top crypto projects — and the #DropGold hashtag accordingly picked up early steam.
As part of the campaign, Grayscale created an eponymous website — dropgold.com — and produced an associated television commercial. In the video, two investors have an epiphany and literally ditch their gold holdings as others around them struggle to collect the precious metal.
sound ON! pic.twitter.com/SEGAmMItsE
— Grayscale (@GrayscaleInvest) May 1, 2019
As the narrator of the commercial explained:
“Why did you invest in gold? Are you living in the past? In a digital world, gold shouldn’t weigh down your portfolio. You see where things are going. Digital currencies like bitcoin are the future […] and unlike gold, they actually have utility. Leave the pack behind. It’s time to drop gold.”
In their announcement, Grayscale outlined that reallocating even a modest portion of a portfolio from gold to bitcoin could lead to more aggressive returns than through holding gold alone:
“#DropGold is a call to action: investors should reassess and reallocate the gold in their portfolios, invest in Bitcoin, and reap the benefits of a diversified investment strategy.”
An Ethos Millennials Will Embrace?
In the least, the Grayscale crypto campaign makes an argument that should be an easier sell among Millennials.
A recent Blockchain Capital poll indicated that as much as 18 percent of U.S. adults ages 18 to 34 owned some amount of bitcoin — a percentage that far outpaced other age groups’ reported ownership levels. The poll also found that 42 percent of the same Millennial demographic declared they were likely to purchase BTC in the next five years.
Imo GreyScale's https://t.co/ayppLOsaRA campaign is doing exactly what you'd want from a marketing perspective: triggering gold bugs and sparking debate. It moves the media focus away from payments to store of value, and it asks: Will Millennials prefer bitcoin over gold? pic.twitter.com/WsNckG9nrq
— Tuur Demeester (@TuurDemeester) May 1, 2019
Commenting on the Grayscale PR blitz, Adamant Capital’s founding partner Tuur Demeester said the media campaign was being fueled by a keen marketing maneuver, namely in emphasizing that gold is old and bitcoin is new and that today’s younger investors are set to increasingly embrace digital assets as they themselves age in the decades ahead.
One day prior to the campaign launch, Grayscale founder Barry Silbert chimed in on the gold vs. bitcoin debate himself in noting that the majority of Millennials were apathetic to gold.
That comment came in response to Adamant Capital co-founder Michiel Lescrauwaet’s argument that Millennials were the hottest on bitcoin because of their generation’s experiences, i.e. living through the 2008 financial crisis and the boom of peer-to-peer and open-source projects.
6) couldn't care less about gold https://t.co/VeqgFpHUL7
— Barry Silbert (@barrysilbert) April 30, 2019
On the other hand, ShapeShift founder and long-time bitcoiner Erik Voorhees applauded the Grayscale commercial but asserted that gold and cryptocurrencies were “complimentary” rather than being zero-sum competitors.
“The wise will own both,” he said.
The commercial is amazing. However, gold and crypto are complimentary, and valuable for many of the same reasons. The wise will own both. https://t.co/hZ1FFZNRX1
— Erik Voorhees (@ErikVoorhees) May 1, 2019
Wherever you stand in the debate, it’s clear that in an investment context gold and bitcoin — both deflationary commodity-currencies — function respectively as hedges against the inflationary and presently hegemonic U.S. dollar. However, the price actions of gold and its digital cousin have been historically uncorrelated.
Of course, the general idea of a mainstream financial portfolio is to fill it with assets that are uncorrelated, or as uncorrelated as possible, so as to balance out potential losses against potential gains.
From that perspective, adding bitcoin to a portfolio that already has gold in it or reallocating from the latter to the former makes sense. A recent analysis by cryptocurrency analyst Larry Cermak indicated that bitcoin and cryptocurrency prices had “no meaningful correlation” with traditional assets like equities and commodities.
The takeaway? The cryptoeconomy’s top assets may make for rational additions to mainstream portfolios that could use further diversification.