2020 was the year of digital gold history amid a pandemic and unprecedented money pressures. In 2021, only Bitcoin matters, and if you compare it to gold at this point, the coin will sell short.
Now is the age of cryptocurrency, and no comparison shows it is better than the two charts you will see side by side.
The Bitcoin standard comes about when gold melts
Bitcoin was developed by Satoshi Nakamoto as the first form of digital peer-to-peer cash, but also wanted to give the cryptocurrency several characteristics of a commodity such as rarity. This was achieved through the asset’s 21 million BTC hard cap.
The cryptocurrency maker’s early comments indicated a strong fascination with gold and appear to have attempted to create a digital representation of the hard money standard.
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The term gold standard is used to describe a time when all fiat currencies were pegged to the shiny precious metal, and it was a time that was much more successful and the wealth gaps weren’t nearly as large.
The development of the dollar and all fiat money into what it is today abolished the gold standard decades ago. As a result, the price per ounce of gold rose by $ 30 to $ 2,000 over the past year.
However, at the height of the gold bull market, a torch transition took place. The moment gold peaked in August coincides with the moment hedge funds and public corporations started buying BTC.
The gold value has gone down while the bitcoin value has increased. Coincidence? | Source: BTCUSD on TradingView.com
From that moment on, Bitcoin was in its strongest uptrend to date, rising from $ 10,000 to $ 50,000 with less than a trillion of capital available for it. Gold outflows began to surge as bitcoin trading volume and open positions for futures rose to previous highs.
If the $ 10 trillion that gold market capitalization has goes into Bitcoin, the price per coin could reach more than $ 500,000 apiece.
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The graph above shows exactly when the deviation took place and gold started the downtrend. Before that, both assets initially did well as a post-pandemic safe haven, but since then the digital currency has fully adopted.
The digital gold story was effective, and now bitcoin is poised to replace the dying dollar instead.
Bitcoin once closely tracked a gold fractal for years, which has benefited the young cryptocurrency well so far. But now that the torch has passed, will Bitcoin soon be the capital to catch up?
Featured image from deposit photos, charts from TradingView.com
