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Bitcoin (BTC) is on a warpath ahead of its halving event in April, buffeted by the benevolent tailwinds emanating from the relentless inflows into the cryptocurrency’s spot ETFs, which have now attracted $5.63 billion in cumulative net inflows. Yet, some uber-bullish analysts are setting their sights much higher and betting on a David vs. Goliath fight between Bitcoin and Gold.
Bitcoin’s near-term bullish thesis is quite solid. At the current pace of inflows, spot Bitcoin ETFs are soaking up around 12.5x more Bitcoin each day than can be produced via mining. Once the halving event arrives, the reward for mining a single block of Bitcoin will be cut in half to just 3.125 BTC. This means that in the post-halving phase, spot Bitcoin ETFs will start soaking up around 25x as many Bitcoins as can be produced each day via mining – assuming that these ETFs’ inflows remain roughly constant over this time frame – leaving no room for the cryptocurrency’s price but to adjust upwards.
In fourteen countries representing 1B+ people and $7T+ in GDP, Bitcoin is becoming a lifeboat. pic.twitter.com/W2yngQNOrn
— Balaji (@balajis) February 22, 2024
Would you be surprised to know that Bitcoin is already at all-time highs for over 1 billion people? Well, this is exactly what has happened for people living in 14 countries and representing a combined GDP of over $7 trillion. Of course, as the halving event nears, an ever-greater proportion of the world is expected to witness new all-time highs for Bitcoin.
Will Bitcoin Vanquish Gold?
I wonder how much of the outflows of Gold ETFs are ending in #Bitcoin ETFs.
After convincing the gold bug today, I think the rotation is inevitable, at least 1%.
Once BTC hits 100k, I think the rotation gets faster and more aggressive. https://t.co/bzQSXvwdfw
— James Van Straten (@jvs_btc) February 21, 2024
Some of the outflows from Gold ETFs in recent days are ending up in spot Bitcoin ETFs. At the ongoing pace, the cryptocurrency’s spot ETFs will soon exceed the size of their gold brethren. Yet, some analysts are now going a step further and postulating that Bitcoin’s market cap will exceed the entire market-based valuation of Gold.
“Software is eating the world”
Is #Bitcoin stealing Gold’s crown?
Let’s find out 👇🧵 pic.twitter.com/Hok93AuOmM
— André Dragosch | Bitcoin & Macro ⚡ (@Andre_Dragosch) February 26, 2024
André Dragosch, ETC Group’s head of research, has now penned an exhaustive thread on X on just such an outcome. Dargosch rightly contends that while Gold has just managed to keep pace with inflation, it has utterly failed to do so with the ultra-loose monetary policy in the US, which has seen the Federal Reserve’s balance sheet expand by orders of magnitude over the past decade or so. In contrast, the analyst notes:
“Bitcoin was one of the few assets to keep up with the expansion of the Fed’s balance sheet and even outperform it by a very wide margin.”
Dragosch contends that Bitcoin is already gobbling up Gold’s monetary premium – where excess demand for assets that are deemed to be a store of value prompts investors to pay a premium to acquire them.