Bitcoin was first touted as the replacement for the US dollar. This narrative has broken down except with the biggest of Maxis.

Now the idea is that Bitcoin is digital gold. It is not a medium of exchange. Instead, people are looking at it as a store of value.

Recently, the price of gold has taken off while Bitcoin has dropped a ton. The price went from $125K to the present level of under $90K.

So what is going on? Are we looking at the death of the "store of value" narrative for Bitcoin?

Let us take a look at this.

Bitcoin As Digital Gold - Breaking Down?

Let us start by saying the store of value idea is a stretch at best.

The business cycle is always in operation. I know there are many who believe that this can be combatted. It is interesting to see central bankers and gold bugs both buying into the concept that the business cycle can be altered. In fact, this was the basis for Karl Marx entire thesis.

When the business cycle takes a turn down, asset prices follow. The reverse is also true. Hence, purchasing power increases as things turn worse while decreasing in expanding economies. Of course, wages tend to follow the same pattern. When the economy is in the toilet, jobs are lost. Companies tighten their belts. Again, when things turn around, eventually, there is a battle for labor.

Gold has caught quite a run the last year or so. The move was astounding.

Many will claim the manipulation of gold, even though there are a number of major trading centers around the world, is ending. That is more justification.

Here is the reality with gold:

It is not a hedge against inflation. Lay the CPI (or whatever inflation indicator) chart over gold price and see how they do not operate in correlation. We had a 40 year record in the CPI post-COVID and gold didnt move.

What gold is a hedge against is uncertainty. This is where we see the major move. When Putin invaded Ukraine, it set the world on its ear. Now, we are seeing calls for World War 3, something that is hard to dispute is coming.

This makes gold very attractive. It is a metal that can be moved. People accept it all over the world. Of course, government can confiscate it as we saw repeatedly throughout history. That said, it is a safer play than real estate when the war drums are being beaten.

Bitcoin - Speculative Asset

Bitcoin might eventually get to the same point as gold. What is obvious is we are not there yet. Nothing says that Bitcoin is anything more than a speculative asset.

In other words, we are still in the "price go up" era.

What will cause that to change?

This is where the transition, if it will occur, takes place. It starts with traditional HODLers. This is not the retail buyer. Instead, we are referring to entities such as central banks and governments.

These are the kings of buy and hold. They often acquire assets in large chunks and do not sell except in dire situations. The Fed will alter its holdings of Treasuries by a wide margin. When it comes to other assets such as gold, they tend not to change it much (except to periodically add more).

If Bitcoin is the ultimate HODL asset, then it can end up being a store of value in the general sense. There will always be supply and demand issue, which is altered by the business cycle. Nevertheless, the downside can be limited as more of the supply is held.

Fixed money always pools so it will happen with $BTC. Right now, the largest of money players are not buying Bitcoin, at least publicly. Hence the media coverage can get extremely bearish.

We will see if moves are made in 2026 that alters this arrangement. Last year, many governments looked at adding digital assets to their holdings. Will there be follow through this year?