Why did I choose to compare Bitcoin to Gold, asks Ashraf Laidi of AshrafLaidi.com.
Three simple answers: 1) Both are comparable in terms of their store of value and quasi-limited supply); 2) Both have shown to act as possible substitutes/competitors to one another; 3) The 16.0 ratio has had a solid track record in calling inflection points in the value of BTC vs USD and other assets.
More on BTC vs gold below. You've already heard that Bitcoin is a form of monetary gold. They both serve as stores of value but are far from the best medium of exchange. The market value of gold that's above ground is around $9 trillion, whereas for Bitcoin it is $670 billion. As Bitcoin disruption picks up partly with the help of democratization from one of the safest investment instruments (ETFs) by the world's biggest asset manager (Blackrock manages $9.4 trillion), it has the potential to gain 13x (9trillion/670 bln) to catch up with gold's capitalization. We learned in 2020-2022 that things can happen fast.
Bitcoin remains the strongest computer network (confirming and validating transactions) in the world and money is the most powerful social network. It combines these two elements, alongside speed of exchange as powerful as email. Bitcoin is not controlled or backed by a sovereign state, while its supply shall remain capped at $21 million. As sovereign states resort to fiscal acrobats, living month-to-month by issuing debt to meet existing obligations, the fixed supply nature of Bitcoin combined with its technical invincibility makes it hard to miss. The Bitcoin/Gold ratio has been well above 16/oz for over a week. Take another look at the video to assess for yourself what happened to BTC when the ratio held or broke over the past seven years.
Learn more about Ashraf Laidi at AshrafLaidi.com
