Bitcoin is poised to claim a significant portion of the gold market, according to Jurrien Timmer, a director of global macro at Fidelity. He estimates that Bitcoin could capture nearly a quarter of the market currently held by banks and private investors.
Timmer based his calculations on the total value of gold, excluding jewelry and industrial use, and compared it to the value of Bitcoin. He believes that Bitcoin could reach a valuation of $1.5 trillion, which is $500 billion more than its current market value.
Many experts have drawn parallels between Bitcoin and gold, often referring to Bitcoin as digital gold. This comparison is rooted in similarities such as scarcity, durability, and their perception as stores of value.
Timmer predicts that Bitcoin will eventually capture around 25% of the monetary gold market, which he estimates to be worth around $6 trillion. “Monetary gold” refers to the gold held by central banks, financial institutions, and governments as part of their reserves.
Bitcoin recently surpassed the $1 trillion mark for the first time in over two years, prompting speculation about its future trajectory. Skybridge Capital founder Anthony Scaramucci has suggested that Bitcoin’s total value could reach half that of gold.
Timmer’s analysis is based on a variation of the stock-to-flow model, which compares the current stock of a commodity to the flow of new production. While this model has been used in the commodities market, critics argue that it may not fully account for Bitcoin’s market dynamics.
Although Bitcoin and gold do not always trade in tandem, Timmer notes that Bitcoin’s growth has aligned with the stock-to-flow model so far. However, it remains to be seen how the model will apply once Bitcoin reaches its 21 million coin cap and new coin production ceases.
Despite fluctuations in their prices, both Bitcoin and gold continue to attract investor interest as alternative assets with potential value preservation properties.
