2020 has been the year of the digital gold narrative for Bitcoin in the midst of an epidemic and unprecedented coinage activity. Now is the age of cryptocurrency and no comparison shows it is better than the two charts you will see side by side.
Bitcoin standard emerges as gold melts
Bitcoin was conceived by Satoshi Nakamoto as the first form of peer-to-peer digital “cash”, but it also attempted to give cryptocurrency various attributes of a commodity such as rarity. This was achieved by the asset’s fixed figure of 21 million BTC.
Early comments from the creator of the cryptocurrency demonstrated a marked admiration for gold and seems to be trying to create a digital representation of the hard currency standard.
The term gold standard is used to describe a time when all fiat currencies were fixed to the shiny precious metal and were much more prosperous and wealth gaps were not nearly as wide.
The conversion of the dollar and all fiat money to what it is today abolished the gold standard decades ago. As a result, the price of gold for an ounce jumped to the $ 2,000 level last year.
At the peak of the golden bull market, the passage of the torch took place. The moment gold peaked in August coincides with the moment when hedge funds and public companies started buying BTC.
From then on, Bitcoin has maintained its strongest uptrend ever, rising from $ 10,000 to $ 50,000, nearing a trillion market cap. Gold outflows started to increase as Bitcoin trading volume and futures open positions started climbing to previous highs.
If the $ 10 trillion gold market value commands enter Bitcoin, the price per token could be more than $ 500,000.
The chart above shows exactly when the divergence occurred and the downtrend of gold began. Prior to this, both assets initially performed well as a post-pandemic safe haven, but since then the digital currency has taken over completely.
The digital gold narrative has been effective and now Bitcoin is ready to aim to replace the dying dollar.
Bitcoin has once been keeping a close eye on the gold fractal for years, and this has so far benefited the young cryptocurrency well. But now that the torch has passed, will Bitcoin be the asset to catch up soon?