1 year ago
41 The coming decade may be Bitcoin’s time to copy gold’s 1970s breakouts, according to Capriole Investments.
Bitcoin (BTC) is due to copy gold’s explosive 1970s breakout as it becomes the world’s “hardest asset” in 2024. That was one projected from the most recent edition of the Capriole Newsletter, a financial circular from research and trading company Capriole Investments.
Bitcoin Due Big Moves ‘And More’ In The 2021s
Despite Bitcoin price action flagging at almost 80% below its latest all-time high, not everyone is bearish about even its mid-term outlook. While calls for a further plunge before BTC/USD finds its new macro bottom remain, Capriole is convinced that 2023 will be bright for Bitcoin as a reserve asset.
The reason, it states, lies in the global economy’s financial history of the last 100 years, and mainly, the United States after the dollar de-anchored from gold entirely in 1971. Gold, as the world’s premier haven asset of the time, saw ‘massive’ gains during that decade, and 50 years later, it seems to be Bitcoin’s turn.
Capriole wrote:
“Because gold was much smaller in the 1970s (and Bitcoin today is even smaller by comparison), it had the capacity to make big moves through a decade of inflation and high-interest rates. That’s one reason why we believe Bitcoin will do the same, and more, this decade.”
Accompanying market charts underscored gold’s potential to repeat its 70s behavior, among which were a “cup and handle” chart structure that has been playing out since 2010.
XAU/USD 1-month annotated chart. Source: Capriole Investments
When it comes to Bitcoin vying with gold for the crown, in the meantime, the potential seems to lie in the numbers – at only 2.5% of gold’s market cap, BTC losing over 80% from its $69,000 peak in 2021 little bearing on the general picture.
The newsletter continued:
“Given Bitcoin represents just 2.5% of gold’s market capitalization today, its 80% drawdown adds a mere 2% additional drawdown to the combined hard money (gold + Bitcoin) drawdown. Giving a total hard money drawdown of 24% through to November 2022, comparable with the 1970 and 1975 figures for gold.”
If the stage is already set for a Bitcoin (BTC) copycat move of the 70s gold, the growth potential is hence highly impressive – even now, BTC’s market cap is only 10% that of gold before its bull run of the time started.
Capriole said:
“Bitcoin has more growth potential than gold because it is smaller. A like-for-like demand in both assets will result in a 40X greater price change for Bitcoin.”
‘The Hardest Asset In The World’
Another critical argument echoed that long supported by commentators like Saifedean Ammous in the popular book, The Bitcoin Standard.
In the book, the debate focuses on investors’ shift to Bitcoin as its inflation rate plunges below that of gold, increasing its monetary ‘hardness’ compared to the precious metal:
“There are many other attributes that make Bitcoin stand out from gold, such as its equitable decentralization, ability to transfer instantaneously and be used for micro-payments. But most importantly, Bitcoin is harder than gold.”
This, Capriole said, will confirm Bitcoin as “the hardest asset in the world” at its next block subsidy halving expected to happen in 2024. Capriole summarized:
“All-in-all, gold went up 24X in the 1970s. Now imagine the 2021s, where the Fed can’t afford to be as aggressive (debt is way higher today) and we have digital, accessible, harder money: Bitcoin.”
BTC/USD chart with Bitcoin, gold inflation rate data. Source: Capriole Investments
