I've been checking out a bunch of threads lately and it seems like a lot of folks can’t wrap their heads around the idea that bitcoin might actually reach market cap parity with gold.
So, I decided to take a closer look at some data and charts to figure out where bitcoin is headed and how quickly it’s moving. I also want to address those who cling to the notion that some random altcoin could overtake bitcoin and crush its dominance. That's why I’m kicking things off with a chart on bitcoin's dominance.
We all know the major drop in dominance happened during the altcoin craze in 2017 when bitcoin's market cap got seriously diluted. But let’s be real, that phase taught a lot of people their first big lesson. Almost all of those altcoins (99.99%) never bounced back, while bitcoin was just getting warmed up. I remember people were rooting for ethereum to take the top spot, and honestly, it kind of became a self-fulfilling prophecy as its value shot up because so many thought the time had come for bitcoin to be dethroned. But I think some really savvy and now richer individuals knew when to cash out. The closest ethereum ever got to bitcoin was in June 2017.
Fast forward to now.
I’m not opposed to other coins, and people should invest how they want. But I’ve come around to the idea that bitcoin is really the one to watch. Sure, there are other coins that might have better specific use cases, but bitcoin is the key indicator to gauge the overall health and potential of the crypto space.
Bitcoin is Gold and more.
It's still Young it wouldn't be in parity but surpass the Marketcap of Gold.
Many are just getting to know about it and understand it's importance as a store of value and hedge towards inflation (gold).
Not to mention capacity and needs it can satisfy that Gold can't.
Apart from being inverse to Dollar I dont see why its a definite need to compare the two especially. We dont compare BTC to oil especially or many other commodities. It would be like relating car use and cost to riding a bike, not massively unreasonable but these two things are always intended to do different things and its clear they will always have their own advantages and disadvantages.
My very general take is this is peak dollar, we're at the top of FIAT currency dominating the world and how biased we are to politics instead of trade and business instead. I do expect Dollar to decline as it becomes more obvious in its faults and unfit for use, Im not sure we are close exactly and I dont want to say there is some epic default event. Yen should fail first, its lit red in even more ways yet Japan is a great country also so who knows how it turns exactly.
It's really simple in my mind. Best money always wins based on its properties, and specifically, based on the amount that is brought into circulation periodically. Gold took the best money throne, because it was the least inflationary, comparably to other metals, while inheriting the good properties, such as divisibility and durability.
Bitcoin will take the best money throne because it is completely resistant to supply changes. It's a matter of time before it surpasses gold in terms of market cap.
What you say is just the thoughts and wishes of bitcoin investors, we still cannot know what will happen in the future and affirm anything. Looking at bitcoin's market cap at just over $1 trillion while gold is over $17 trillion, that's a huge gap and I think it will be very difficult for bitcoin to reach, let alone surpass.
To put it bluntly, gold is an asset that has been around for thousands of years, it has proven its strength through many wars, world economic collapses and still stands strong today. That is also the reason why it is always the top priority asset whenever economic instability occurs. Meanwhile, bitcoin is too young to be certain of anything, it is too volatile whenever the world is unstable, and it is not even globally legal yet. So it's too early to say it will surpass gold.
It is not proper to compare these two assets because they are different from each other.
Of course, I know that gold market cap is 14x that of bitcoin, but gold have been in existence for a long period of time, and if bitcoin can be able to survive that long, the market cap will be bigger than that of gold. Bitcoin is still very young, and we can see how much profit it is giving to investors which is bigger than that of gold, and this is the reason why more people will continue adopting bitcoin overtime boosting its market cap.
There are pros and cons when it comes to this aspect. Now, it is up to the investor how he gauge his chances here. But if possible, you can always invest in both to gain the benefits on these 2.
For most non-crypto users, definitely, they will go for gold. But for people here, they will surely include btc in their investment portfolio.
Getting the benefits of both assets will be a good thing. Besides, you are mostly likely considering other type of assets or already have other assets, if you can afford to.
No one denies that bitcoin is more profitable than gold because it is very small and has a lot of potential for growth. That is both the advantage and disadvantage of bitcoin because higher returns come with higher risks, everything is proportional to each other.
There is no guarantee that bitcoin will last as long as gold to be comparable to gold, everything is still unknown for bitcoin and when investing in it we are taking on greater risk. Gold, on the other hand, does not need to prove itself any further because it has proven itself for the past 1,000 years. Gold does not increase too quickly but is extremely stable and always ensures the value of our assets whenever the world is unstable.
Have you ever seen gold dumped 50-70% in the event of war, inflation, recession? But that happens regularly with bitcoin, an asset that is still considered high risk.
Bitcoin is the choice of those who are willing to take risks for high returns while gold will be the choice of those who are already rich and need a safe haven.
I believe I understand what you were trying to convey. I am not sure about the phrase "Bitcoin is Gold and more" though. Bitcoin isn't gold, but it might be more than that. I understand there is some tricky rhetorics in my sentence. But I stick to it and since humanity values things in the name of value, bitcoin might indeed be soon more than gold.
100%
Thanks for the comment!
Who claimed that a comparison is a definite need? I didn't. But I don't see a problem in comparing a plane with a bike. You can easily do that, crunch the numbers, look for carbon foot print, cost of maintenance, value generated and time saved, risk to die using one or the other, you name it. But since you already know it all, there is not much more from my side to add.
Thanks for the comment!
This is an interesting question here. Does best money always win? Or does most money in existence sometimes win because there are variables of control over the system and how the system is allowed to evolve?
But apart from that, I agree with you that in your and my opinion, bitcoin is at least the best competition we could hope for in the face of what we have right now.
Thanks for the comment!
How is it not proper to compare anything? I can compare asset classes, i can compare tools of any kind, I can compare SPVs, I can compare pretty much anything anyone wants for as long as they share at least one characteristic. I think bitcoin and gold do share at least one characteristic.
Thanks for the comment!
No one denies that? I don't know because I don't know everyone. Gold will exist forever because even if it ceases to be important, nobody would have interest in destroying it. This might be fundamentally different for bitcoin. But I personally believe that there have been tries to destroy or stop it, and the realization that there is no destroying or stopping bitcoin, the biggest players in the world instead decide to go with it. I have no hard evidence, but this is what I suspect.
Thanks for the comment!
what I meant by the statement "Bitcoin is Gold and more" is that like Gold it can be used as a store of value and hedge against inflation.
The US dollar became the official reserve because it was backed by Gold and was relatively stable.
Dominance of money is usually associated on how they can resist inflation.
Even though you are probably correct in your conclusion that bitcoin is like gold but more than gold, your description of bitcoin being a store of value and a hedge against inflation does not differentiate bitcoin from gold since gold is also those two things.
What differentiates bitcoin from gold is that it is better money than gold.
As compared with gold, bitcoin is:
1) more verifiable,
2) more divisible,
3) more easy to transport
4) more flexible in terms of programability
5) more scarce
6) less burdened by third party costs - including being able to secure..
7) and yeah there are probably a variety of other things, but who cares?
The above list is enough to establish bitcoin as not ONLY a little bit better than gold but likely in the territory of around 1,000x or more better than gold, even though bitcoin is currently ONLY about 1/15th the price of gold (in terms of total market cap).. so if we might realize that currently, bitcoin is around 30,000x undervalued as compared to go, then we should be able to identify that bitcoin is a buy as compared with gold.. yet at the same time, even though through the past 13-ish plus years, the market has been facilitating the catching up of bitcoin to gold in terms of its market cap growing relative to gold's market cap, yet it surely could still take the market another 50-200 years to sort out these matters in terms of people realizing the fair market value of each of them relative to one another and also it may not be clear if gold has to come down in its price/value or bitcoin has to go up in price/value or a combination of both.
Sure, people are going to have differing opinions, and if you conclude that the current market value of bitcoin as compared with gold is fair or that bitcoin is overvalued as compared to gold, you seem to be living in fantasy land and/or denial like some of the loonies who believe either that you should have equal parts or that you should have more gold than bitcoin.. almost pure stupid, even though smart people believe that kind of nonsense, and also they hinge on the historical value of gold blah blah blah.. which seems also to be in a kind of selective denial and they are free to do whatever they want including likely coming around to the fact that governments and institutions are going to come around too. even though they are used to gold, why would they be holding the inferior money, since value gravitates towards the soundest of monies, which happens to be bitcoin if anyone had not realized and appreciated such factual matter.
It depends on how you define "winning". I suppose you refer to fiat currency. While USD is considered to be global reserve currency, I wouldn't call it a "winner" in terms of economic reality. People who save on the dollar are losing.
The best money will always rise to the surface. The market mechanism is simply too powerful to ignore, regardless of whether this world is governed by bureaucrats. If a bureaucrat says that bananas is good money, it doesn't make it good. It just makes anyone hearing him poor.
Its clear the idea of market cap is not a simple fixed target. Gold was in a cyclical bull market before BTC even came into thoughts of Satoshi and today Gold reaches an all time high decades after.
These two assets have another thing in common which is they both come with ridiculous targets higher, some say gold will be $10,000 an ounce and aren't joking. For context the price was about 30 dollars per ounce beginning the seventies.
So there is alot of growth in gold past present and very likely the future. Somehow we have to estimate if a fast car will be passed by BTC moving even faster. I certainly think the peaks of BTC will exceed gold at some point, the sharp shape of BTC patterns and its ability to spike upwards can even put the commodity market to shame so peak price certainly.
The overall day to day of BTC being a stable market cap larger then gold would be a different consideration. They both suffer alot of speculation which muddies the water. I think both are bullish but if someone seriously said the price will half I would have to read the reasoning and timing as quite possible.
Dollar itself has spiked upwards at times, its not a balanced situation and at times past USA has been 50% of global trade. The dominance of USD was justified in those days but now I view DXY as about as stable as a melting iceberg, subject to dangerous alterations. Invariably in decline, dont doubt it can turn on you and remains gigantic in its momentum & unavoidable when it moves.
For starters DXY is a fake measure of value, its not reflecting real trade but both political and historic ties between countries. With technology altering alot of the world beyond recognition its fair to expect BTC to do better of the two. The majority of what I expect is volatility and erratic prices in all assets, instability favors gold which is probably rising upto this election result. BTC benefits from weak dollar but will react differently to USD as it is a risk or speculative asset to most large market players.
This is actually a good clarification regarding the term "winning". Yes, it is about the mechanism. But you could even overstretch the term "winning" as to call those winners who lose the least. No point of contention here though, the dollar will make you lose significantly. The scarcity aspect of BTC can't be replicated, neither can it be ported into another cryptocurrency as we have seen with all those forks. You can port the data and the balances, but you can't port an entirely genuinely grown network and BTC does have that advantage because it was under the radar for so long.
But the point of my post wasn't so much about a general comparison again because we have seen plenty of times. What I found interesting is rather the excel part and how quickly mBTC approached the value of 1 ounce of gold. That is why I put in some effort into the standardization as I admit, I wouldn't have thought myself about 10 years ago that 1 mBTC would become so valuable so quickly. In hindsight yes because this is the effect of decentralization and being open and public, everyone around the world can buy it somehow and keep it.
And then I saw so many threads who said at 1k that it won't go to 10k and at 10k it was said it can't go to 30k etc. That's why I thought the mBTC - oz. comparison could be interesting.
I added some data points like global wealth because some people (how I perceive it) think that a large chunk of global wealth privately held is parked in gold. But it's relatively small with around 3%. Considering this and then the trend towards digitization and all the needs and wants people have in terms of capital mobility and value preservation, I think BTC has a long way to go. It was mostly to give some people who have their doubts a bit more data to base their own conclusions on. I believe that the majority of the forum couldn't tell from the top of their head how much private wealth there is globally and how BTC relates to that.
A trend I am also observing is that more and more young people would get interested in BTC, but not so much in gold. If this generational change from physical to digital assets continues, then that is another catalyst for the price.
This part needs an addendum and some clarification.
Using the term "dominance" is wrong in my opinion. The correct term is market cap ratio. They basically took bitcoin's solo market cap and divided it by the sum total of an increasing number of shitcoins' market caps. For example right now there are about 10000 altcoins listed on coinmarketcap.com so that is 1/10000.
Additionally it should be pointed out that market capitalization is the wrong factor to even consider when it comes to altcoins because we have no way of knowing their true circulating supply (eg. ETH has 72 million premine most of which is not in circulation) and they can "print" billions out of thin air (you create a token virtually free with billions as its supply and with only $1 dollar price that is billions of dollars of market cap out of thin air).
Another reason is because compared to 2017 for instance, a lot of those shitcoins have died and a lot of the super hyped up and pumped shitcoins like ethereum got dumped hard. Lets not forget that ETH was once worth 0.15BTC and it is now only 0.039BTC.
I agree that there is no need for "gold money" doesn't need to come into bitcoin for it to go up since bitcoin has its own adoption but it is possible that because bitcoin is a new "asset" that people are investing into and as an excellent option for diversification, they put some of their money that was supposed to go into gold into bitcoin instead.
Besides lets not forget that the only reason why gold has been soaring over the past years is the global tensions and the fact that countries like China, India and others have been on a gold buying spree amassing large amounts of it in their vaults expecting the global conflicts to grow and the global economy to become unstable.
That means if all global tensions were to end today, in 3 to 6 months gold would crash hard while bitcoin would soar much higher than anything we've seen so far.
I'm done comparing Bitcoin with Gold, Gold will win some and Bitcoin will win the others, it has always been like that. I am also not one of the people who believe Bitcoin will meet Gold in market capitalization, and my reason is mainly that Gold has the physical value that Bitcoin doesn't have aside from the fact that it has existed for so long to have built the trust of the biggest guys in the industry.
Can you see the way Gold has garnered more trillions of dollars in just a year? Bitcoin couldn't even hit $1.5T till now. We should be realistic, Gold is so valuable and people will continue to hold it dear regardless of how we may pretend and it's not everyone who will trust the virtual Bitcoin, ever, trust me.
Gold won due to global instability, that's why the gold price rise really high in this year. But, I'm sure Bitcoin will beat the "gold's volatility" in the next year since we're heading to bull season, if gold price can rise for 25%, Bitcoin will make it 100%.
That's true Bitcoin not yet become the safest asset for Average Joe, most still think gold and real estate are the most promising.
You don't believe Bitcoin can do a 14x, when it's been doubling every year on average for the last few years?
The physical value is only a tiny fraction of its monetary value. Gold is valuated at where it is, because it has had the best money properties until 2009. Same like, Bitcoin is valuated at where it is, because it is recognized as the best money in terms of monetary properties. It is not valuated at $1T, *just* for being peer-to-peer cash system.
Yes I agree with you, gold is winning right now due to global volatility, but Bitcoin really has tremendous potential. We are about to see a big bull market very soon, the Bitcoin market is going up again, and there is a very good chance that Bitcoin will become much more viable in 2025. Right now the stability of gold and sustainable income from real estate will appeal to many over Bitcoin, but in the future Bitcoin will be the most profitable.
And if we see Trump as the winner of the US presidential election, Bitcoin will definitely become more likely, because he has been announcing that he will support crypto for a long time, so we are sure that if Trump wins, Bitcoin will definitely go much further. And then Bitcoin will outperform everything including gold and real estate.
This is not about Gold won now, Gold has been winning before our ancestors were born and it will continue to win because it is better preferred as a safe-haven asset during uncertain times, the physical presence is contributory as well. Like I earlier said, I do not want to compare Gold and Bitcoin again for many reasons, but still, I fault your statement that "I'm sure Bitcoin will beat the "gold's volatility"" without adding the provable/constructive reason why such will happen. We should stop living in the fantasy of what we believe will happen but what is feasible and provable.