Inflation concerns have led to more volatility in the stock and bond markets of late. That should be good news for gold, a tangible asset with a limited supply that often does well in times of inflation. Central banks can always print more money. Miners cant just magically create more gold.

But gold has recently lost some of its luster thanks to a new financial kid in town: bitcoin. Gold prices are down about 9% this year and are trading nearly 15% below the all-time high of more than $2,000 an ounce set last summer.

Meanwhile, bitcoin has soared nearly 70% and is currently hovering just below $50,000 per coin not far from the record high it reached last month.

Still, fans of gold think the yellow metal is due for a rebound even if bitcoin continues to march higher as well.

Gold is a classic fear trade. Prices rallied last year on worries about coronavirus lockdowns crippling the global economy. But gold also does well when investors are worried about inflation as they are now.

Up, up, up Bitcoins collectively now worth more than $1 trillion

Plus, the price volatility of bitcoin may make it less attractive than gold to many big institutions looking to protect their cash, despite recent decisions by the likes of Tesla and MicroStrategy to hold bitcoin on their balance sheets.

Investors need a serious hedge against inflation, and bitcoin may not offer that, said Ipek Ozkardeskaya, senior analyst with Swissquote, in a recent report.

Some investors think inflation fears could run rampant again if the US Senate passes President Joe Bidens proposed $1.9 trillion stimulus package. There are questions about whether that much money is really needed now that there are multiple Covid-19 vaccines and more people are returning to work.

The worry is that all the federal stimulus money will eventually cause the economy to overheat, leading to even higher inflation. That, in turn, could boost gold prices further.

The reason that we see higher gold prices is also mainly because the US House passed the stimulus package. We have a real fear of higher inflation, Naeem Aslam, chief market analyst with AvaTrade said in a report, adding that more stimulus will only fuel the fire of inflation.

Analysts at European asset manager Amundi are also concerned about a sudden spike in inflation due to higher interest rates as the US economy recovers.

They argue that investors need to stay vigilant and get ahead of this inflation scenario and that buying gold is one way to do so.

Gold could also provide support amid abundant liquidity in the current environment, the Amundi analysts wrote in a report.

Analysts from UBS Global Wealth Management also said in a report Tuesday that the recent pullback in gold looked overdone and that spikes in market uncertaintiescould offer support in the short run.

Still, a gold rebound doesnt have to coincide with a bitcoin pullback. In fact, cryptocurrencies could continue be a good bet at a time when bond yields are expected to keep climbing.

Gold is good for slightly higher inflation but not necessarily much higher real interest rates, said Brad Neuman, director of market strategy at Alger, in an interview with CNN Business.

Neuman said that although inflation is often accompanied by rising rates, the problem is that rates can spike dramatically and hurt the returns on gold. That might be one of the reasons it has lagged bitcoin lately.

As such, Neuman thinks bitcoin as well as crypto-related companies such as PayPal, which now allows users to trade and hold bitcoin on the platform could be even better bets than gold.

Bitcoin backers also point out that the cryptocurrency likely will remain popular with investors who view it as a store of value during times of inflation just like gold.

The biggest reason bitcoin has surged this year probably has more to do with the fact that investors have come to recognize that the cryptocurrency is even more scarce than gold or other precious metals.

There is a cap of just 21 million bitcoins built into its source code. And roughly 18.6 million are already in circulation.

There is a finite number of coins. That is why bitcoin can replace gold, said Steve Ehrlich, CEO of Voyager Digital, a cyptocurrency brokerage firm. It really is more like digital gold and not necessarily a medium for payment.

Most consumers are unlikely to use gold or bitcoin to actually buy anything, but both assets could wind up being investment winners at a time when consumer prices are rising.

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Bitcoin vs. gold: Is cryptocurrency or a mineral a better hedge against inflation? - WRAL Tech Wire

Igor Golovniov | LightRocket | Getty Images

Bitcoin surged above the $52,000 level on Wednesday for the first time.

The red-hot cryptocurrency rose to a record high of $52,340 at around 2:45 p.m. ET, according to data from Coin Metrics.

Bitcoin was created in 2009, not long after the global financial crisis. It has gone from a protest against the banking system to something of a "digital gold" that is beginning to catch on with mainstream investors.

On Wall Street, major investment banks appear to be warming to bitcoin. JPMorgan said recently it's looking seriously at the asset class, and Goldman Sachs has also shown an interest in crypto. A division of Morgan Stanley is reportedly considering adding bitcoin to its list of possible bets.

Companies like PayPal and Mastercard have made significant moves to support cryptocurrencies. And Tesla last week said it had invested $1.5 billion into bitcoin and planned to accept the digital currency as payment for its products.

"We believe the story and theme here is much larger than just investing in Bitcoin and predicting its future price, but rather around the potential ramifications that crypto, blockchain, and bitcoin could have across the technology and corporate world for the next decade," Dan Ives,WedbushSecurities' managing director, said in a note Wednesday.

"From Paypal, and Square, to the likes of Nvidia, Tesla, IBM, Visa, Mastercard and many other companies across verticals, we believe the trend of transactions, bitcoin investments, and blockchain driven initiatives could surge over the coming years as this bitcoin mania is not a fad in our opinion, but rather the start of a new age on the digital currency front."

Bitcoin's latest rally has reminded many investors of its massive ascent to nearly $20,000 in 2017, which was followed by a plunge the following year that saw the digital coin lose 80% of its value.

But the world's most valuable cryptocurrency has since staged a fierce comeback, more than quadrupling in 2020 and gaining over 70% this year.

Bitcoin's proponents say it's due to increased demand from institutional investors as well as corporate buying of the digital currency from the likes of Tesla, Square and MicroStrategy. Skeptics, on the other hand, worry bitcoin may be the biggest market bubble in financial markets.

Strategists at JPMorgan warned in a note Tuesday that unless bitcoin's volatility starts to ebb, its current price "looks unsustainable." Bitcoin and other cryptocurrencies have gained a reputation for their extreme price swings.

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Bitcoin smashes through $52,000 to hit a new all-time high - CNBC

In this photo illustration, visual representations of the digital cryptocurrency, Bitcoin are arranged on January 4, 2021 in Katwijk, Netherlands.

Yuriko Nakao | Getty Images

GUANGZHOU, China Bitcoin could rise to $1 million over the long term to become a reserve currency for the world, according to one asset manager.

But JPMorgan warned of risks ahead as the cryptocurrency continues to rally.

Anthony Pompliano, co-founder and partner at Morgan Creek Digital Assets, said bitcoin could hit $500,000 by the end of the decade. It could eventually reach $1 million per coin, he added, without giving a timeline.

"I think that bitcoin will eventually rise to become the global reserve currency. I think bitcoin will eventually be much much larger than the gold market cap," he said during the latest episode of CNBC's "Beyond the Valley" podcast.

Meanwhile, global central banks have been easing monetary policy such as lowering interest rates and buying assets through the so-called quantitative easing program to help cushion the blow to economies hit by the coronavirus pandemic.

"There were trillions of dollars that were printed and injected into the economy and everyone from individuals to financial institutions and corporations ran around the world looking for the best way to protect their purchasing power, they ultimately decided it was bitcoin," Pompliano said as he discussed what was behind bitcoin's surge.

(Bitcoin) will eventually take that seat at the kingdom of being that global reserve currency of the internet generation.

Anthony Pompliano

Morgan Creek Digital Assets

The bitcoin bull's prediction that bitcoin could hit $1 million is based on a few factors including the scarcity of the cryptocurrency which has a cap of 21 million coins, as well as the decentralized nature of the technology.

There is no central authority like a central bank that controls bitcoin.

Instead, the so-called bitcoin network is made up of miners who process transactions. These miners operate a vast array of specialized computers required to carry out the bitcoin mining process.

As there are many different miners, no single entity can control the network. And because the computers they use are often very powerful machines, bitcoin proponents claim the network is one of the strongest computer networks in the world.

"As more and more people come into the market, there is more liquidity. As there is more liquidity, there is more utility. As there's more utility, there's more stability in the price you get kind of this evolution," Pompliano said.

"If you think about that internet economy, there is no native currency (bitcoin) will eventually take that seat at the kingdom of being that global reserve currency of the internet generation."

In January, JPMorgan released a note to clients putting a "theoretical" long term price target on bitcoin of $146,000 as bitcoin begins to compete with gold.

Gold is broadly accepted as a "safe haven" asset where investors flock to in times of political strife or financial market turmoil. Bitcoin is now beginning to develop such a reputation.

"Bitcoin is competing with traditional gold, bitcoin is a form of digital gold," Nikolaos Panigirtzoglou, global markets strategist at JPMorgan, told CNBC's "Beyond the Valley."

He said that the value of gold held by the private sector, solely for the purpose of investment, is around $2.7 trillion. For bitcoin's market cap to reach that, it would need to hit a price of around $146,000.

But there are caveats, the biggest one being the volatility in bitcoin's price. The digital coin is known for wild swings in price. Panigirtzoglou said bitcoin is "five times more volatility than gold."

The key to bitcoin's volatility converging with gold is institutional adoption, the JPMorgan strategist said.

"The faster the pace of institutional adoption, the quicker that convergence in volatility will take place," he said.

Still, there are risks ahead for the current rally. While it has been driven by institutional investors, retail participation has also been high.

"The biggest risk is that the flow impulse we've seen over the past months slows materially from here," Panigirtzoglou said.

"In particular when the economies reopen, people go back to the office, they have less time to trade at home, and as a result some of that, retail flow impulse slows from here," he added.

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Bitcoin at $1 million? Some analysts are bullish but others warn of risks ahead - CNBC

Former Seattle Seahawk Russell Okung puts half of salary in Bitcoin, considered highest paid in the league now originally appeared on NBC Sports Northwest

Former Seattle Seahawk offensive lineman Russell Okung has been in the league for 11 years now.

And the veteran seems to be making all the right moves when it comes to his money.

Back in December, Okung decided that he wanted half of his $13 million contract for 2020 in Bitcoin -a cryptocurrency.

He got his wish when he asked to be "paid" in Bitcoin.

With the recent surge of Bitcoin continuing to rise in value week after week, it seems that Okung made the right decision at the exact right moment.

If we are looking at where Bitcoin is at now, Okung could be considered one of the highest salaried NGL players at this moment.

From Bitcoin.com:

For instance, when BTC hit $44k, the half of his contract that is paid in BTC climbed to $10.59 million, at $56k+ his half turned into more than his entire quoted salary. As far as 2020 NFL salary stats are concerned, Okung has entered the top five position. However, the NFL has recently decided to cap the leagues salaries at $180 million and a ball players contract could change in 2021. Because the Carolina Panthers offensive tackle (OT) gets half of his salary in BTC, many proponents think of him as the highest-paid player in the NFL and not just ahead of the highest-paid OTs.

Story continues

One person went as far as to state that Okung is now the highest-paid player in the NFL. While a group of other people on Twitter made it known to the public that Okung made a smart move by putting some of his money in Bitcoin.

Okung has been a fan of wanting to be paid in Bitcoin for some time now, and that he is paying off for him in ways no one would have expected.

Money is more than currency; its power, said Okung in a statement. The way money is handled from creation to dissemination is part of that power. Getting paid in bitcoin is the first step of opting out of the corrupt, manipulated economy we all inhabit.

Okung went further into that statement adding:

When we are all paid in bitcoin, no one can tell us what to do with the value we create In a post-fiat world, you wont have to worry about your labor and time being stolen.

Russell Okung

With this news hitting the airways now, you can expect other players to try and get a portion of their contracts paid in Bitcoin as well.

The 32-year-old Okung is the first NFL player to have a portion of his contract in Bitcoin.

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Former Seattle Seahawk Russell Okung puts half of salary in Bitcoin, considered highest paid in the league now - Yahoo Sports

St. Louis Federal Reserve President James Bullard told CNBC on Tuesday he believes increasing interest in bitcoin does not pose a serious threat to the U.S. dollar as the world's reserve currency.

"I just think for Fed policy, it's going to be a dollar economy as far as the eye can see a dollar global economy really as far as the eye can see and whether the gold price goes up or down, or the bitcoin price goes up or down, doesn't really affect that," Bullard said on "Squawk Box."

Bitcoin, in particular, has been championed by crypto bulls as a store of value that can be used to hedge against inflation or the debasement of fiat currencies like the dollar. Some have touted it as "digital gold." In addition, bitcoin and other cryptocurrencies also present themselves as a way to buy goods and services like actual money.

Bullard, who has led the St. Louis Fed since 2008, expressed concerns about widespread transactions using a range of cryptocurrencies that are not issued by governments. "Dollars can be traded electronically already, so I'm not sure that's really the issue here. The issue is privately issued currency," he said.

Before the Civil War, it was common for banks to issue their own notes, Bullard said. He likened it to Bank of America, JPMorgan and Wells Fargo all having distinct brands of dollars. "They were all trading around and they traded at different discounts to each other, and people did not like it at all," he said.

"I think the same thing would occur with bitcoin here," Bullard said. "You don't want to go to a nonuniform currency where you're walking into Starbucks and maybe you'll pay with ethereum, maybe you'll pay with ripple, maybe you'll pay with bitcoin, maybe you'll pay with a dollar. That isn't how we do this. We have a uniform currency that came in at the Civil War time."

Bullard's comments happened shortly after the price of bitcoin eclipsed $50,000 per coin for the first time. The latest leg higher for bitcoin follows moves into the crypto space by established financial firmssuch asBNY MellonandMastercard.

Tesla also announced last week it bought $1.5 billion worth of bitcoin using cash on its balance sheet and planned to accept the digital coin as payment for its products. The electric vehicle maker's action was viewed by some as another major step toward broad acceptance of bitcoin, which is the world's largest digital currency by market value.

While Uberdoesn't plan to buy bitcoin as an investment, CEO Dara Khosrowshahisaid it's possible the ride hailing and food delivery company would eventually allow customers to pay with digital coins. "Just like we accept all kinds of local currency, we are going to look at cryptocurrency and/or bitcoin in terms of currency to transact," Khosrowshahi told CNBC on Thursday. "That we'll certainly look at and if there's a benefit there, if there's a need there, we'll do it. We're just not going to do it as part of a promotion."

When considering whether cryptocurrencies present a threat to the dollar, Bullard stressed there's nothing new about competition. It's something that has gone on for centuries, he said. "It is a currency competition, and investors want a safe haven. They want a stable store of value, and then they want to conduct their investments in that currency," the St. Louis Fed president said.

For example, he contended both the euro and the yen are strong currencies. However, "neither of those is going to replace the dollar," he said. "It'd be very hard to get a private currency that's really more like gold to play that role so I don't think we're going to see any changes in the future."

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Bitcoin poses no threat to the dollar as the world's currency leader, Fed's Bullard says - CNBC