Gold has been on an incredible run as of late, and that will ultimately be good news for Bitcoin
Some may not have realized it, but bitcoin has been incredibly successful in one aspect, but failed miserably in another aspect.
Bitcoin works very well as a digital store of value but doesn't work much at all for every day payments.
The reasons for this are numerous and I won't really get into the specifics here but the general reasons are:
- Too slow
- Too expensive
- Tax laws
There may be solutions to the first two problems in the future but that third point is still going to make it tricky unless we get a change in the tax laws, which may or may not happen any time soon.
Irregardless of all of that, bitcoin works very well as a store of value...
Yes it is volatile in the short term, but if you zoom out it's been steady climbing from the lower left to the upper right.
Which isn't all the much different than what happened with its shiny cousin.
Gold was very volatile for a period of time as well before decades of trading eventually subdued much of that volatility which will likely happen to bitcoin at some point as well.
Currently gold is enjoying the best price action it has seen in years, probably a decade in fact.
It's been holding steady over $2,000 an ounce and it's total market cap is now close to $10 trillion...
(Source:
)https://twitter.com/dannydiekroeger/status/1292256765602455553/photo/1
- dannydiekroeger
That may not sound like that big of a deal, but it is, especially as it concerns bitcoin.
With bitcoin currently trading a little over $200 billion, there is a ton of runway out there by comparison.
If bitcoin were to take say, 20% of the current gold market, that would be $2 trillion and roughly 10x the current price of bitcoin and I'm not sure about you but bitcoin taking 10% of the current gold market sees very reasonable to me.
Here's the really exciting part though...
What if gold keeps climbing?
What if 2 years from now the gold market is worth $15 trillion or $20 trillion?
In that same scenario where bitcoin takes 20%, we would be looking at a $3 trillion or $4 trillion bitcoin market.
Which would be 15x-20x the current price...
And again we are only talking about bitcoin taking 20% of the gold market.
What if it were to take 30%? Or 50%?
I'll let you do the math on those, but gold increasing is value is likely also a good thing for bitcoin eventually.
Stay informed my friends.
-Doc