The price of bitcoin continues to rise, setting a fresh record high. The price for one bitcoin is now worth more than one ounce of gold, but this is less significant than it may seem, say experts.
Gold and bitcoin prices crossed overnight. The crypto currency has set a fresh record high of $1,290.13, while a gold ounce currently trades around $1,228.
Part of the reason for the switch is that gold has had a rough week. The price for the precious metal has fallen more than 2 percent this week, due to the strengthening dollar and several indications from members of the Federal Reserve hinting towards a potential interest rate hike in March.
Meanwhile, the price for the digital currency is up more than 7 percent this week. A recent regulatory clamp down by the People's Bank of Chinahas proven beneficial for bitcoin. Speculation around an imminent decision by the U.S. Securities and Exchange Commission on whether it will approve a bitcoin-based ETF (exchange traded fund) has also created heavy buying pressure.
Looking more broadly, bitcoin has enjoyed a stellar recovery over the past 12 months, climbing more than 214 percent from a low level of $407.98 last March.
In contrast, the price for gold has fallen 1 percent over the past 12 months. Gold prices fell heavily following the result of the U.S. election, but have been recovering steadily since mid-December.
However, while bitcoin prices are climbing, the digital currency has a much lower market cap compared to gold, highlights Fran Strajnar, co-founder & CEO of data and research company Brave New Coin.
"The gold supply is 180,000 tonnes of 'above ground' gold, valued at $7 trillion. The bitcoin market value is $20 billion, so gold vs bitcoin is psychological more than anything," he told CNBC via email.
"The comparison is perhaps a positive signal that bitcoin is being commoditized. But bitcoin is not a commodity, while gold has been a commodity for thousands of years."
The price movement is less significant than it may seem, says Adrian Ash, head of research at Bullion Vault.
"Price is just a number, and overtaking one ounce of gold doesn't in itself mean much. More important is that bitcoin is making new highs. That signals both a growing appetite for alternative assets and also that crypto currency is finding new, perhaps unwary, buyers," he told CNBC via email.
Charles Hayter, founder of digital currency comparison website CryptoCompare, said there is ultimately no significance behind bitcoin prices being higher than gold prices.
"Bitcoin has been linked to gold as a store of value and a flight to safety - the truth is that bitcoin is its own asset class in its own right and does fairly well in times of uncertainty - however it is also subject to its own internal forces too, such as its governance or lack of to be more accurate," he told CNBC via email.
Also, bitcoin prices could be set for a shock if the SEC does not approve a bitcoin ETF. Strajnar predicts it is unlikely to pass.
"This is for a few reasons but mainly because no ETF in the US has the issuer also act as custodian and index provider all in one. We assume this application is still viewed as a qualitative risk to investors by the SEC (Securities & Exchange Commission)," he said.
"If the ETF is not approved we expect a correction and consolidation period but growing adoption and the deflationary supply of bitcoin suggests a continued uptrend in the medium term."