While the ‘digital gold’ has lost two-thirds of its value in the past year, gold has declined by about 3% year-to-date. Over the past year, the precious metal is currently just in the green, with about 0.6% of upside as spot gold price hovers around $1,794 an ounce on 8 December.
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What’s stopping Bitcoin from outperforming gold?
Bitcoin has failed to break higher in the $17,000 region since its sharp breakdown amid the implosion of crypto exchange FTX. This has set back the adoption cycle, Mike McGlone, a senior macro strategist at Bloomberg, noted today. However, he believes the nascent asset could end up outperforming the metal in the long term.
According to the commodity guru, nothing stops Bitcoin from going on to outperform gold. He suggests the crypto that reached highs of $69,000 in 2021 before plummeting to lows of $16,000 in late 2022 “is a top contender” to beat the traditional safe-haven asset.
McGlone says Bitcoin is unmatched as the most fluid trading vehicle in the world, despite its decline in a risk-off environment. Yet, BTC could still emerge as a “high-beta version of gold and US Treasury bonds,” the strategist tweeted.
According to the commodities expert:
“The nascent technology/asset is a top contender to outperform the metal in the long term, as we see it, and is packing up into a too-cold price zone. Our graphic shows Bitcoin-to-gold ratio at about the 10x level, which was first reached in 2017. In a world rapidly going digital, the benchmark crypto is a top competitor to old-guard gold.”
Bitcoin’s volatility is still high compared to gold’s, currently at about 4x. But the 260-day volatility has decreased significantly from the 10x levels registered in 2018. The declining relative BTC risk suggests it could only be down to when, rather than if, Bitcoin outperforms gold again.