Crypto is siphoning off gold’s market cap. Bitcoin could increase 50x in price by stealing Gold’s thunder
Gold bugs keep asking themselves why their precious metal isn’t going up considering the current uncertainty, drums of war, and excessive debt in the global markets. I mean it should right?
The answer is simple: Bitcoin, and crypto-currencies in general, are becoming mainstream and lots of the new money that used to come into safe haven assets is going into crypto now. The more time passes and the longer these coins survive, the more trusted they become, the more people find out about them and use them as a store of value and an easy way to transfer money across the Internet, as well as for the many other applications that are coming in the future.
Gold keeps stagnating as Bitcoin prices go up. Image courtesy of http://www.visualcapitalist.com
Also, the new generations, starting from those of us raised in the 90’s are plenty comfortable with the Internet and mobile apps. Gold looks to them like a relic from and old VHS Indiana Jones movie. The costs of storing it, holding it or transferring it actually make no sense to new generations.
The Peter Schiff show
It’s been very amusing lately seeing Gold bug and Youtube celebrity, Peter Schiff, bashing Bitcoin increasily often on his channel. Just last week he released a 47 MINUTE video entirely dedicated to Bitcoin! When I played the video the first thing I see is a Charlie Shrem comercial about Bitcoin, granted, this is likely based on my viewing habits but still epic!
Most Youtube Bitcoin personalities don’t devote as much time to talking about it as he did, except from "long play" Tone Vays maybe :) The comments on his videos are really amusing, people are making trolling Peter a new internet sport, similar to trolling Shia Labeouf a few months ago…
Does he not realize the more he talks about it, the more his followers will discover Bitcoin and cryptocurrencies and choose to diversify their holdings? Also, the more he gets triggered by trolls, the more they will come to his channel to get funny reactions from him and his followers.
Communicating vessels analogy
If we compare Crypto and Gold market caps to communicating vessels, we see that Crypto still has a long way to go. The world's Gold supply has a market cap of about $8 trillion dollars, that's more than 100 times the market cap of Bitcoin so by siphoning off market cap from Gold we could easily see price increases of more than 50x before we see a leveling off. What will likely happen is that volume rushing in will surpass the medium level and fluctuate back and forth until they reach an equilibrium, so we could see even more than 50x increases in price for a while.
Google Trends comparison
A Google Trends comparison shows Bitcoin searches are still small compared to Gold but Bitcoin's long term trend is up while Gold's is either stagnating or going down
Financial Crisis will bring Gold Bugs and Crypto investors together
Eventually, I believe both Gold and Crypto will increase tremendously in price because we are overdue for a major financial crisis in the United States and, subsequently, the world. Price increases will happen, not only because they will both be more in demand, but because fiat currencies, in particular the dollar, will be greatly devalued by politicians to combat the crisis in their typically keynesian ways.
Because of its abundant supply Gold will probably increase about 2x or 3x, but its purchasing power will likely remain about the same. Hey, it’s still a great way to pay off your mortgage;) We’ll still need about the same amount to buy that proverbial suit with Gold as in the Roman times.
Crypto, being less abundant (the top coins), and also by stealing some of the thunder from precious metals, will likely go up 50X or more in future years as a deep crisis finally materializes after 8 years of easy FED money inflating bubbles everywhere.
Most Gold bugs will eventually capitulate and diversify into crypto, including Peter Schiff…
Check out my previous posts:
AS PREDICTED: The U.S. Market is entering a bear market. Crypto and Gold expected to soar!
Tell me what you think about this post in the comments below. This is not professional investment advise. I'm not your financial advisor. Only invest money you can afford to lose!
Happy crypto investing!