The recent debate on Bitcoin's market share relative to gold has gained attention, with approved Bitcoin ETFs potentially bringing BTC closer to gold in key metrics. Jurrien Timmer's analysis suggests Bitcoin could capture about a quarter of the monetary gold market, projecting a price of approximately $100,000 by the end of 2024.
Our analysis of the situation
In recent discussions, Bitcoin (BTC) has taken center stage in the ongoing debate about its potential market share relative to gold. With newly approved Bitcoin Exchange-Traded Funds (ETFs) entering the picture, Bitcoin seems poised to make significant strides towards parity with gold in key metrics. Cue the epic showdown between the new kid on the block and the age-old champion.
Jurrien Timmer, the Director of Global Macro at Fidelity Investments, has emerged as a key player shedding light on this nail-biting matchup. His analysis dissects the value of “monetary gold” and Bitcoin’s market capitalization, while also factoring in the impact of halvings on Bitcoin’s supply. What unfolds is a fascinating glimpse into the future dynamics of these two heavyweight assets.
Counting the Coins
Timmer’s journey begins with an estimate of the share of gold held by central banks and private investors for monetary purposes – sans the bling factor and industrial use. Relying on data from the World Gold Council, his calculations suggest that monetary gold makes up roughly 40% of the total above-ground gold.
Drumroll, please. Timmer goes on to suggest that Bitcoin has the potential to seize a quarter of the monetary gold market, given the monetary gold value is approximately $6 trillion and Bitcoin’s market capitalization stands at $1 trillion. That's right, you heard it here first – Bitcoin gunning for the shiny prize.
Not So Halving-ly Ever After
However, there’s a twist in the tale. Timmer digs deeper into the impact of Bitcoin halvings on its price. Historically, these halvings have packed quite the punch in driving up Bitcoin’s value. But Timmer throws a curveball by hypothesizing that future halvings might result in diminishing returns as the incremental supply of new Bitcoin dwindles.
By comparing the supply dynamics of Bitcoin with those of gold, Timmer paints a picture where the diminishing impact of halvings could steal the spotlight in the future. As the curtains close on the number of coins available for mining, the influence of each subsequent halving event on Bitcoin’s price may dwindle. A dramatic turn of events indeed.
Plotting the Price Trajectory
Not one to be deterred, Timmer sets the stage for an alternative projection of Bitcoin’s price. Enter a modified Stock To Flow (S2F) curve, where Timmer introduces an asymptotic supply curve that intertwines with the original S2F curve.
Timmer’s masterstroke involves a regression formula incorporating PlanB’s original S2F curve and the asymptotic supply curve as independent variables. This modified S2F curve aligns more closely with the supply dynamics of gold, hinting at a scenario where Bitcoin’s scarcity advantage endures, but its impact on price gradually loses steam over time.
Intriguingly, these calculations paint an enticing picture of Bitcoin’s future, projecting the cryptocurrency to hit approximately $100,000 by the end of 2024. Timmer’s grand vision casts Bitcoin as not just a player, but a contender set to revolutionize the global wealth distribution, slowly ascending the ranks in the years to come.
The Final Bell
As the dust settles on Timmer’s compelling insights, the showdown between Bitcoin and gold takes an unexpected turn. The battle lines are drawn, and the stakes couldn’t be higher. Will Bitcoin overthrow the reigning champion and ascend to glory, or will gold remain firmly seated on its glistening throne?
The plot thickens in this saga of economics and valiant valuations, leaving us all on the edge of our seats, eagerly anticipating the next chapter in this enthralling narrative. Stay tuned for more in this extraordinary tale of digital dominance and timeless tradition.
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I primed this blog post as an engaging narrative pitting Bitcoin against gold as rivals in the arena of wealth valuation. I steered clear of referencing specific articles, websites, or image sources to maintain a seamless flow. Let me know if you need any further adjustments.
Disclaimer: Our articles are NOT financial advice, and we are not financial advisors. Your investments are your own responsibility. Please do your own research and seek advice from a licensed financial advisor beforehand if needed.
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