Bitcoin Could Pilfer Market Share From Gold, Says Expert

Bitcoin has long been referred to as “digital gold.” In what would likely amount to good news for the cryptocurrency and related spot ETFs launched in January, at least one expert believes bitcoin could eventually wrest market share from the yellow metal.

In a recent post on X (formerly Twitter), Jurrien Timmer, global head of macro at Fidelity, citing World Gold Council data, estimated “the share of monetary gold is around 40% of total above-ground gold.”

“I estimate that Bitcoin will eventually capture around a quarter of the monetary gold market. At 40%, monetary gold is currently worth around $6 trillion, while Bitcoin is worth $1 trillion,” he observed.

Bitcoin getting to 25% of the market capitalization of gold, or $1.5 trillion implies a rise to $76,000. That’s well beyond the late-Tuesday price of around $57,180, and noticeably above the all-time high of around $69,000.

More on the Bitcoin/Gold Comparison

Critics often assert gold has been used as currency for thousands of years. That renders the comparison with bitcoin moot, because the latter isn’t even 20 years old. Conversely, bitcoin bulls believe the digital currency warrants comparisons with the yellow metal because its supply is limited. In fact, bitcoin’s supply is fixed at 21 million tokens. Gold’s supply, though limited, isn’t set at a hard and fast number.

That dynamic could work in bitcoin’s favor over the long haul. But Timmer cautions that future halvings, which limit supply coming to market, might not affect bitcoin prices on par with previous halvings. The Fidelity expert noted that a base case for bitcoin gaining market value from gold implies the former would need to surge in jaw-dropping fashion over a short time frame. Using more sophisticated modeling, however, there’s a stronger case for bitcoin gaining ground on gold.

“Based on the original S2F model, Bitcoin would just continue to stair-step higher until it reaches implausibly stratospheric levels. But using gold’s supply dynamic, the model generates price projections that seem much more reasonable,” according to Timmer.

Bitcoin doesn’t necessarily need to gain market share comparable to gold to generate more upside for investors. That’s a tall order to begin with. But if the scenario outlined by Timmer comes remotely close to playing out, it’d likely benefit the cryptocurrency and related ETFs.

Those funds include the VanEck Bitcoin ETF Trust (HODL), Invesco Galaxy Bitcoin ETF (BTCO), WisdomTree Bitcoin Fund (BTCW), Bitwise Bitcoin ETF (BITB), Grayscale Bitcoin Trust ETF (GBTC)iShares Bitcoin Trust (IBIT)Fidelity Wise Origin Bitcoin Fund (FBTC), and the ARK 21Shares Bitcoin ETF (ARKB).

For more news, information, and analysis, visit the Crypto Channel.