Deutsche Bank: If Bitcoin Is Digital Gold, Ethereum Is Digital Silver

A new report from Deutsche Bank AG DB Research reasons that if Bitcoin BTC/USD is the 21^st century “digital gold,” then Ethereum ETH/USD is “digital silver.”

What Happened: Marion Laboure, a market strategist at Deutsche Bank, outlined how digital currencies could shape the future of payments in a new report.

“People have always sought assets that were not controlled by governments. Gold has had this role for centuries. And yes, I could potentially see Bitcoin to become the 21st-century digital gold,” said Laboure.

She reminded readers that gold too has been historically volatile, but cautioned people against viewing Bitcoin as a reliable store of value today because it is likely to be “ultra-volatile in the foreseeable future.”

According to Laboure, there are three reasons to expect extreme volatility in Bitcoin’s short-term future.

“First, about two-thirds of Bitcoins are used for investments and speculation. Second, due to its limited tradability, just a few additional large purchases or market exits can significantly impact the supply-demand equilibrium,” she said.

“Third, Bitcoin’s value will continue to rise and fall depending on what people believe it is worth. Small changes in investors’ overall perceptions about Bitcoin can have a large impact on its price,” she added.

The Deutsche Bank analyst drew attention to Bitcoin’s large market cap and trading volume, which far outpaces its closest competitor Ethereum, despite the fact that the latter offers far more use cases and applications.

“Bitcoin is clearly the pioneer, and the most traded crypto,” she said. “If Bitcoin is sometimes called “digital gold”, Ethereum would then be the “digital silver.”

Price Action: At the time of writing, Bitcoin was trading at $43,850, gaining 1.78% over 24 hours. Ethereum gained 4.96% over the same period and was trading at a price of $3,100.