Bitcoin is Starting to Compete with Gold as a Store of Value

With a market cap just shy of $2 trillion, bitcoin is about 10% the size of gold ($18 trillion).

Two years ago bitcoin was less than half that.

“If the current bitcoin bull market continues, bitcoin could overtake gold in terms of investment value,” says research firm Ecoinometrics.

Bitcoin has now been de-risked: global bans are unlikely, it won't collapse as a bubble, and it's positioned to stay relevant for the long run.

The chart below is an interesting one to watch, showing bitcoin as a ratio of gold. It currently costs 38 ounces of gold for one BTC. BTC is volatile relative to gold but the trend is massively in bitcoin’s favour.

The more important figure is gold tied to financial markets, worth about $5 trillion (because most gold is used in jewellery and industry). That being the case, bitcoin currently represents 40% of gold’s market.

Both are store of value assets. In uncertain times, investors allocate larger amounts to gold, and – increasingly – bitcoin.

We may be a decade or so away from BTC matching gold’s market cap, which will be another milestone in its inexorable march to financial powerhouse.