I came across this chart on X, and it's been circulating quite a bit.
So here's a thought. Are we witnessing the start of a big shift from Gold as the main Store Of Value to Bitcoin? If we look at the market's performance, maybe that's the best way to gauge it. Who knows, Bitcoin might just keep climbing until it hits Gold's total market cap and then keep going even higher.
Let's pick two random dates in a 10-year history, ignore the scale as it's one year on a graph and 3 months on the other, because looking a the entire history with both prices next to each other and the correlation would be....boring
https://newhedge.io/bitcoin/gold-correlation
Any moment now, any!!!! moment!
Personally, I don't think money from Gold will shift to bitcoin. I believe money from US treasuries (dollar) will flow to gold and bitcoin.
Central banks all over the world are selling their US treasuries and buying Gold. But they may also buy bitcoin soon.
Even if it is a small amount, just a few trillions would make bitcoin skyrocket.
Bitcoin and gold will coexist, they are not competing, in my opinion.
Yep, I agree. Bitcoin and gold will coexist. One won't replace the other. Any investment that is still relevant won't be replaced. Gold remains highly relevant, as do company shares and real estate. Gold might get compared to Bitcoin because it's normal. They have a lot of similarities, so comparing them is not far-fetched. People will compare them in terms of performance, but they won't compete in the sense that one has to replace the other.
As long as Bitcoin continues to exist, its market cap will continue to increase, because demand for Bitcoin will definitely increase, and the supply will keep reducing every 4 years. This will make the price continue increasing and eventually will get to the market cap of Bitcoin. However, we have to be realistic here. It's decades away from getting there. Even if Bitcoin price gets to $1 million today, it would still be over $10 trillion away from Gold's market cap.
If we revisit the origin of need of strategic bitcoin reserve, we can understand that the shift of paradigm has already started. When your traditional reserve is not supporting you in enough means, you will look for new reserve and this is what exactly happened with US economy.
I mean. gold was too stagnant for decades and zero contribution to the growth of economy, obviously you will look for new reserve. Another reason might be, not letting other country to take advantage of being a first mover with a new technological advancement.
When a country itself started thinking about alternate and/or additional options for their federal reserve, we need to realize that the shift of paradigm already in progress.
Co-exist for time being but will start competing each other and bitcoin got all the potential to conquer. The shift of paradigm could be a sign for that.
I really doubt that bitcoin could ever replace gold.
Gold the oldest asset and currency that ever existed and it is still valuable today , hitting new ATH every month....
Bitcoin has a place in this world , but it is not the same as gold.
Although you're right, the actual point, or actual question of the matter is when Gold starts going down, will Bitcoin start surging again like it was during 2020?
Plus you said that you agree that a Paradigm Shift could happen at "any moment". I believe in THAT moment we will probably see Gold go down and Bitcoin surge, no?
Note that Bitcoins supply is fixed and halving does not reduce the total supply (21 million BTC), it only slows down the rate of supply growth.
But I couldn't agree more with you that it will take a very long time for bitcoin to reach gold market capitalization and could take decades or more. That wont happen within the next decade, or in the next two or three cycles as many investors are spreading. No matter how strong the demand for bitcoin is, adding another $20-30 trillion is not easy and will not happen overnight. Not to mention, gold isn't stopping to wait for bitcoin to overtake it. It can be said that surpassing gold capitalization is not an easy task.
This is why I feel Market cap is overrated in this context. Using market cap alone to judge an asset is not very accurate. For example, Bitcoin's market cap can easily be above $10 trillion right now if it has about 100 million bitcoins in circulation. Look at the distance in price between gold and bitcoin, yet look at the difference in market caps, simply because there is so much gold in circulation.
The way of using price alone to determine an asset is not accurate; likewise, using market cap alone. What should be looked at is how they perform over the years and their behaviour. If you look at the top 20 crypto coins today, it's just a bunch of useless coins with hundreds of millions or even billions of market cap, and they cant perform well because they are not scarce. The supply is way higher than the demand.
Before now, bitcoin was invented to serve as an alternative to the fiat currency, but from the performance of it overtime and how it is being utilized more as an asset of investment, it then became a major of comparison between other top assets in the world. Gold became a major asset of comparison with bitcoin because of its nature of being used as a store of value.
Bitcoin reached all criteria to be used as such, having many similarities to that of gold and just few differences which Bitcoin had an edge over it on that aspect as being a digital asset to hold. Gold had to be the closest asset of comparison to gold, its now as though bitcoin has something to look up to perform exemplary and surpass it one day. Its just a matter of time, I also feel the total market cap of bitcoin with surpass that of gold one day.
I have a different opinion.
Although you might be right that it could take "more than a decade", we should not close our minds from the possibility that Bitcoin may once again prove the doubters wrong. Plus there were also those people who never thought that Bitcoin would rich a six digit price valuation per coin, no?
¯\_(ツ)_/¯
Just like Bitmover said, it will be difficult for money to move from gold to Bitcoin because most of the people buying gold do not even believe in Bitcoin. China who are the leader in this gold rush will not move their money from gold to Bitcoin, at least not in the nearest future. Perhaps we should expect fresh money from institutions to flow into Bitcoin and a reduction in the aggressive buys we see in gold which will halt the rise of gold and propel the rise in Bitcoin. This is my guess and there are indications it will materialized as we have seen in the news that France has proposed a bill to acquire 2% of Bitcoin total supply to set up strategic reserve.
I have heard similar statements so many times. Like those who said that digital newspapers would never replace print newspapers. Bitcoin has many advantages over gold, and in a world that is constantly shifting toward digital, it makes sense that Bitcoin will continue to eat into gold's market cap. It will take time, though, because gold has many years of history, as you say.
5 Reasons Why Bitcoin Could Be A Better Investment Than Gold
I read that gold is about 4.5 billion years old, you can imagine that number of age compared to bitcoin that is just about 15 years of age. I think the paradigm shift is here already and in fact growing very fast.
Apart from regulation of bitcoin that will draw in many more adopters to it because of trust that will increase with regulation, bitcoin has inherent value that is making it over take gold in modern day investment viability. Gold is being sustained on trust with its potentials and utility but if you look at investment, the digital gold (bitcoin) has more possibilities of taking the front seat from gold. Lets check out these reasonable 5 factors and really bitcoin has proved all those from our experience so far.
1. Bitcoin Is Scarce and Truly Limited in Supply
2. Bitcoin Is Resilient When the Dollar Weakens
3. Bitcoin is Safer in a Crisis
4. Bitcoin has Faster Value Recovery
5. Bitcoin Is More Likely to Beat Inflation
I do not foresee a paradigm shift. The gold rally seems to have ended or at least stalled, as the price has dropped well below its newly set all time high, but i don't think money would flow from gold into bitcoin, neither do i think bitcoin will replace gold.
I do not see any competition between gold and bitcoin, they are two different assets that attract different kinds of investors and then there are investors that acquire the both of them to diversify. Gold is a safe haven asset and that is a crucial edge it has over bitcoin, meaning investors would always run to it in times of crisis and political/economic uncertainty/instability.
BTC's volatility has to reduce before we can talk about a competition. The fact that many of us (including myself) believe in bitcoin does not remove the fact that bitcoin is considered a "risky" investment by quite a lot of investors out there.
Yes, you're right. Some people didn't even expect bitcoin to get to $1 trillion market cap, let alone more than $2 trillion. It proved so many doubters wrong by getting to where it is today. I have no doubt that bitcoin will get to gold's market cap one day, but from the behaviour of bitcoin in its relatively short history, its price doesn't just surge up to a never-imagine price and stay that way. For example, if Bitcoin pumps up to $250k next month, there is every chance that the price will correct soon and get back to its normal price. With this, it's very difficult to believe Bitcoin will go from just over $100k to around $2 million within a decade or two. I'm not saying it's not possible, but it is highly unlikely. Like, very, very unlikely, because that is not how bitcoin behaves. That is the behaviour of memecoins that surge upwards overnight and crash two days later.
Nowadays with the type of view majority have about Bitcoin
Bitcoins alternative or competitor isn't Fiat anymore but Gold especially as Bitcoin is seen more as a store of value than a medium of exchange.
So Fiat moved would go into either Bitcoin or Gold. Depending on the investors attitude towards risk.
With how cancerous inflation is eating deep on fiat value many people having realised they need where they can hedge their funds to store and add value against inflation, bitcoin and gold has become such a safe-haven alternative for a lot of people, and for some high risk takers they could actually invest in both assets.
Moving further, I do corroborate with what a member said about gold and bitcoin coexisting in the market and relatively not competing with the other.
What it need for bitcoin to replace gold is just a lab made gold to be economic enough for everyone to create one.
Technology advances and I'm sure we'll eventually find that one method that enable lab made gold to be viable and cheap.
Its gonna be difficult, but it's not impossible. Other than that we do interplanetary drilling.
And why shouldn't it act like the other times when, as you can see in the graph and the correlation below it didn't? Before thinking if the markets would react the same, probably we need to go back in 2020 and look at the events at that time and if we have the same situation...
So 2020....what happened in 2020....Did anything happen? Can figure it out but there was something...
Oh shit!!!!!!!!!!!!
Yeah, my bad, forgot to add the /s.
How did the price of Bitcoin react during the COVID-19 outbreak and the start of the war?