Markus Thielen, Head of Research at Matrixport thinks that is is just a matter of time before Bitcoin overtakes the market cap of Gold. This seems possible due to a number of advantages that comes with BTC which are absent in Gold.
Though BTC has been long dubbed as the digital gold, the current scenario, as per a Matrixport report highlights why the conditions for Bitcoin overtaking Gold is ripe now.
Further, history suggests that an impending bull run could be on the cards as US rate hikes come to a pause.
In a weekly report by Matrixport, Markus and team evaluate how Bitcoin can overtake Gold in the coming years, especially in the near future when there are high chances of a recession in the USA and the already existence of a recession in the Europe.
The report highlights that there have been historical similarities between Gold and BTC, both of which have been used as a hedge against recession in the past. Investors have always chosen Gold as a hedge against recession in the past. Bitcoin has also been considered digital gold because of its ability to outperform other asset classes during bad times.
The Matrixport report also highlights that at $540 billion, BTC is already near 11% of Gold's market cap despite being in existence for less than 15 years compared to Gold's nearly 6500 years. Matrixport and its Head of Research Markus Thielen estimate that after the approval of Bitcoin ETFs, which are very much possible in the near future.
From the angle of National Debt in the USA, the report by Matrixport says that when debt to GDP ratio surpasses 70%, the burden of debt in the US economy prioritizes debt servicing over new investments. Such a situation creates a decline in investments and a scenario necessitating capital preservation. In such scenarios, BTC and Gold emerge as assets that provide a safe haven against inflation.
The last time when the US Federal Reserve, paused its rate hikes for seven months, Bitcoin had a monster rally of +325% from $4k to $12.5k.
Gold as an asset class has thrived for over 6.5k years, due to its universal acceptability, fungibility, and limited existence. However, it also carries a lot of burdens such as risk of being looted, physical transportation, and reliance on third party labs for quality assurance.
However, BTC has none of these burdens despite having all the qualities of Gold.
Several experts are of the view that BTC is better than Gold and each one of them have their own reason to justify their support.
Bitcoin provides several improvements over Gold, yet, it lies severely unregulated, which hinders its growth. Despite all it has managed to reach 11% of Gold's market cap which signals its capacity to grow more once the situation improves.
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