bitcoin versus gold: the digital currency's journey towards $40,000
Jurrien Timmer, head of Macro for Fidelity, offers insightful analysis of bitcoin's trajectory, comparing it to “exponential gold.”
Their thesis suggests that bitcoin, like its older counterpart gold, has value in times of structural inflation, but comes with a touch of added risk. In that sense, Timmer believes that both assets are excellent for capturing the attention of investors looking to protect themselves from “reckless monetary inflation.”
As seen in the chart below, if bitcoin follows a similar trajectory as above, its price could target $100,000 and $1,000,000 by early 2025.
<img loading="lazy" decoding="async" class="wp-image-564633 size-large" src="https://www.newsbtc.com/wp-content/uploads/2023/12/bitcoin–btc-BTCUSDT-Chart-2.jpg?w=860&resize=860%2C503″ alt=”bitcoinbtc BTCUSDT Chart 2″ width=”860″ height=”503″ srcset=”https://www.newsbtc.com/wp-content/uploads/2023/12/bitcoin–btc-BTCUSDT-Chart-2.jpg?w=1556 1556w, https://www.newsbtc.com/wp-content/uploads/2023/12/bitcoin–btc-BTCUSDT-Chart-2.jpg?w=460 460w, https://www.newsbtc.com/wp-content/uploads/2023/12/bitcoin–btc-BTCUSDT-Chart-2.jpg?w=768 768w, https://www.newsbtc.com/wp-content/uploads/2023/12/bitcoin–btc-BTCUSDT-Chart-2.jpg?w=860&resize=860%2C503 860w, https://www.newsbtc.com/wp-content/uploads/2023/12/bitcoin–btc-BTCUSDT-Chart-2.jpg?w=1536 1536w, https://www.newsbtc.com/wp-content/uploads/2023/12/bitcoin–btc-BTCUSDT-Chart-2.jpg?w=750 750w, https://www.newsbtc.com/wp-content/uploads/2023/12/bitcoin–btc-BTCUSDT-Chart-2.jpg?w=1140 1140w” sizes=”(max-width: 860px) 100vw, 860px” data-recalc-dims=”1″/>The potential price of btc will reach $100,000 and $1,000,000 if it follows previous trajectories. Source: Jurrien Timmer via X
2020 was pivotal for bitcoin and gold, with fiscal and monetary stimulus bolstering their appeal. However, bitcoin is differentiated by its limited supply of 21 million coins, which contrasts with the continued but modest annual growth in the supply of gold.
This limited supply has driven bitcoin's “stock-to-flow” (S2F) ratio significantly higher than that of gold. Furthermore, bitcoin's journey reflects the classic S-curve of technological innovations. Its exponential growth trajectory reflects historical trends in technology, from railroads to mobile phones.
However, predicting the future of bitcoin based on these S curves is complex, since slight deviations in these growth phases can “dramatically” alter the results, says the expert.
SEC deliberations and institutional interest shape bitcoin's future
Timmer's observations include a potential impact of the SEC's early decisions on the bitcoin spot exchange-traded fund (ETF). He theorizes that pending product filings could attract new investors, but remains cautious about whether this will trigger a “sell the news” event and a big crash.
Interestingly, a small percentage of bitcoin is held for less than three months, suggesting that the recent price surge is not merely “speculative” but rather offers support for a longer uptrend.
True believers in bitcoin, as indicated by the growing percentage holding them for more than five or ten years, are unlikely to be swayed by short-term news. However, there is notable activity in the bitcoin futures market, particularly among asset managers, which could suggest anticipation of the SEC's move.
<img loading="lazy" decoding="async" class="wp-image-564637 size-large" src="https://www.newsbtc.com/wp-content/uploads/2023/12/bitcoin–btc-BTCUSDT-Chart-3.jpg?w=860&resize=860%2C498″ alt=”bitcoinbtc BTCUSDT Chart 3″ width=”860″ height=”498″ srcset=”https://www.newsbtc.com/wp-content/uploads/2023/12/bitcoin–btc-BTCUSDT-Chart-3.jpg?w=1583 1583w, https://www.newsbtc.com/wp-content/uploads/2023/12/bitcoin–btc-BTCUSDT-Chart-3.jpg?w=460 460w, https://www.newsbtc.com/wp-content/uploads/2023/12/bitcoin–btc-BTCUSDT-Chart-3.jpg?w=768 768w, https://www.newsbtc.com/wp-content/uploads/2023/12/bitcoin–btc-BTCUSDT-Chart-3.jpg?w=860&resize=860%2C498 860w, https://www.newsbtc.com/wp-content/uploads/2023/12/bitcoin–btc-BTCUSDT-Chart-3.jpg?w=1536 1536w, https://www.newsbtc.com/wp-content/uploads/2023/12/bitcoin–btc-BTCUSDT-Chart-3.jpg?w=750 750w, https://www.newsbtc.com/wp-content/uploads/2023/12/bitcoin–btc-BTCUSDT-Chart-3.jpg?w=1140 1140w” sizes=”(max-width: 860px) 100vw, 860px” data-recalc-dims=”1″/>btc investors held on to their coins despite the massive and extended trend. Source: Jurrien Timmer via X
Any SEC update would come in a transformed macroeconomic environment. Unlike the liquidity-rich period of 2020-21, recent policy changes by the US Federal Reserve (Fed) have reversed the rise in monetary inflation.
This change aligns the current situation more with the post-World War II era than with the inflation of the 1970s, impacting the urgency of the value proposition of gold and bitcoin.
As btc matures, its relationship with traditional financial markets and global economic trends becomes increasingly complex. With the SEC's decision and a shift in the macro arena, the coming months are set to exert influence on the leading cryptocurrency and the nascent sector.
