Bitcoin vs commodities

From the way it behaves to the type of people who trade it, bitcoin is often seen as an enigma. So, how does it compare to commodities such as gold, silver and oil, and what are the demographics of traders across these markets?

Supply and demand

The supply of bitcoin comes from a process known as ‘mining’, where computers in the network are rewarded with new bitcoin for verifying transactions. But how do fluctuations in bitcoin’s supply affect the cryptocurrency’s price? To find out, we’ve taken a look at the historical production and value of bitcoin compared to gold, silver and crude oil.

As the chart above shows, the annual supply of bitcoin has fallen since 2013 while its average price has increased by 2867%. These effects can be explained by a rise in demand for bitcoin over the period, which drove prices up and reduced network speeds (slowing the rate at which new coins were mined). The annual supply of bitcoin also fell by 50% in 2016 as a result of a bitcoin halving – an event next scheduled for May 2020.

In contrast, annual supply of the three commodities has increased slightly since 2013 while demand has fluctuated. Brent crude and silver saw their values drop by over 30% as a result, while gold decreased by almost 10%.

Trade preference by age and gender

Who are the people trading bitcoin? To find out, we analysed profitable trades across the bitcoin, gold, silver and crude oil markets, to see how trading preferences vary by age and gender.

Age

As the chart below shows, bitcoin was most popular among Gen X and millennial traders,1 with this market accounting for just under a quarter of trading activity across the four markets.


In contrast, it was the youngest traders that opted for gold,1 with almost 50% of Gen Z’s profitable trades being made on this commodity. A full percentage breakdown of the results is as follows:

Bitcoin Brent crude Gold Silver
Baby Boomers 20.41% 18.76% 43.93% 16.90%
Gen X 24.55% 17.81% 42.40% 15.24%
Millenials 24.45% 17.75% 44.43% 13.37%
Gen Z 23.25% 15.46% 49.67% 11.62%

Gender

As the chart below shows, women were more likely to trade gold than men,1 with a higher proportion of their profitable trades placed on this market than the equivalent for male traders (55.04% against 49.70%).

Men, meanwhile, were more likely to trade Brent crude and bitcoin than women.1 These markets accounted for 15.89% and 21.33% of men’s successful trades respectively, compared to just 13.58% and 18.24% for women. Both genders were equally likely to trade silver,1 however, with 13.14% of women’s successful trades being placed on this market and 13.07% of the equivalent for men.

Footnotes
1 Based on an assessment of profitable trades, which is being used as a proxy for overall trading behaviour.


This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

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