Bitcoin and gold have outpaced all other significant asset classes this year, showcasing how uncertainty in the U.S. macroeconomic landscape is influencing investor decisions.
Gold has jumped 48% year to date, nearing an unprecedented high around $4000. In contrast, Bitcoin has increased over 30% this year, surpassing a record of $126,000. Remarkably, this is the first instance where both assets claimed the top performance positions within a single calendar year.
Both upward trends are driven by similar underlying factors: a quest for safety amidst deteriorating U.S. fiscal conditions and increasing expectations that the Federal Reserve will shift toward rate reductions.
With the federal government facing rising debt and the threat of a lengthy shutdown, investors are turning to assets that can help maintain purchasing power.
Ecoinometrics, a platform focusing on macro analysis, supports this perspective.
The platform highlights that while Bitcoin excels in total returns, gold still outperforms when considering risk adjustments.
The analysis shows that this trend has persisted for the last two years, indicating a consistent desire for tangible assets as U.S. debt increases and fiscal responsibility comes to the forefront of economic discussions.
The firm remarked that those investing in Bitcoin and gold are essentially hedging against what they perceive to be a gradual decline in fiat currency value.
Bitcoin’s Long-Term Advantage Over Gold
While both assets are being praised for their present market performance, there is a growing belief that Bitcoin may soon surpass gold.
In an October 7 post on X (formerly Twitter), Matthew Sigel, head of digital assets research at VanEck, suggested that Bitcoin could achieve half of gold’s market capitalization after its next halving event in April 2028. This halving reduces Bitcoin’s issuance rate by 50%, consequently decreasing supply and often leading to price increases if demand stays constant.
Sigel noted that younger investors, especially in emerging markets, are increasingly regarding Bitcoin as a more valuable asset compared to gold. He stated that gold’s value primarily comes from its function as a reserve, rather than industrial or jewelry demands.
Should Bitcoin continue to be viewed favorably, its market potential could grow significantly. Based on gold’s current peak price, Sigel estimated a corresponding valuation of $644,000 per BTC.
Many industry veterans share his optimistic outlook.
Dave Weisberger, founder of CoinRoutes, claimed that Bitcoin’s real bull market has yet to commence when contrasted with gold.
Given this context, he anticipates that Bitcoin will surpass gold in the upcoming cycles, solidifying its status as the “preeminent hard money.”
Weisberger articulated:
“When the real Bitcoin bull market begins, it will be evident from the surprised reactions flooding this platform… Until that moment, Bitcoin WILL capture a portion of the growing global liquidity, yet the most spectacular developments are still to come.”
Similarly, David Marcus, former president of PayPal, noted that if Bitcoin were valued like gold, its fair price could exceed $1.3 million per coin.
Their optimism rests on Bitcoin’s technological advantages over physical gold.
Unlike gold, Bitcoin is a digital asset that is divisible and transferable across borders without the need for intermediaries. Additionally, it offers programmable features that allow for new financial use cases unavailable to traditional commodities.
While fiat currencies remain essential for global trade, evolving geopolitical landscapes and diminishing faith in government-backed money may gradually position Bitcoin alongside gold as a timeless store of value.
