Bitcoin Takes on Gold
Gold has been around since 550 B.C. and it has been the store of value since then. Gold was the ultimate safe-haven asset, but there’s a new kid in town stealing the spotlight away from the precious metal. Bitcoin.
Bitcoin vs Gold
With only 11 years since the release of bitcoin, the king has proved to be a better store of value…
… and more resilient to black-swan events. Notice how bitcoin makes a quicker recovery than gold and stocks.
What’s interesting is that bitcoin’s volatility will continue to decrease as the crypto market matures. So why should you buy more bitcoin instead of gold?
Let’s make a case for it.
Gold’s “limited” supply vs Bitcoin’s 21,000,000 Limited Supply
First off, Nasa’s Hubble Telescope has found an asteroid worth $10,000 quadrillion due to the amount of gold it stores.
While back on earth, the supplied volume of gold (mined and recycled) continues to increase at a steady pace…
On the other hand, bitcoin’s inflation rate decreases as less bitcoin are available to mine. That only means one thing, bitcoin is becoming more valuable as we get closer to the limit of bitcoin’s total supply.
But supply is only one part of the equation. We need to consider demand as the second driver of value.
Bitcoin is +94% YTD and FOMO lures more investors to its extraordinary returns
For gold, we need to look into the past because it’s unclear how the demand for the yellow chips will change once banks become custodians of bitcoin.
With bitcoin, we look into the future. Notice how bitcoin’s demand for future returns continues to increase…
… As we have only two resistance left to break before entering the unknown: price discovery territory.
And as we shatter 14k and 20k, gravity will continue to pull gold lower and lower.
The New Era: Bitcoin Leads the Way
In theory, bitcoin shouldn’t be correlated with any other asset class, but I guess gold is that cousin who you only see for Thanksgiving and other special occasions.
Especially when there is a liquidity crisis following a pronounced sell-off and when we have a crazy year like 2020.
If you ask boomers they’ll probably say that bitcoin is mimicking gold as it “tries” to become a safe-haven asset. But as we have seen with bitcoin’s returns, the king will pave the way.
Why don’t you start buying their gold?