Some people believe that this will not be the case as the relationship between Bitcoin and gold is very high. Analysts predict that, after the COVID-19 crisis, both assets will decouple from each other and BTC will grow more.
An analysis by the data analytics company Ecoinometrics says that the price of Bitcoin (BTC) could increase 10 times in a matter of months as a result of the latest halving. This will only happen if it first decouples from gold.
They predict that, at the end of the current cycle, after the halving, the price will stabilize around USD 110,000 for some time.
Ecoinometrics comes to this conclusion after comparing the pioneering cryptocurrency to gold. They highlight the importance of this comparison since the current narrative that is driving the growth of Bitcoin is that it is “digital gold”, they explain.
A graph shows how many bitcoins it is possible to buy with an ounce of gold (currently 0.146 BTC is equivalent to 1 ounce of gold). They say that they are “ready for another leg down on this chart” 5 months after the May halving.
According to the study, after the last halving, when the reward per mined block had a reduction to 6.25 BTC, “the status of Bitcoin as a fantastic store of value solidified.”
Bitcoin and Gold Join Due to COVID-19 Crisis
The report shows that the correlation between Bitcoin and gold in the months close to the two previous halvings was very low (2% and 11% respectively), which is different today. The correlation between both assets during the last month was 52%, a fairly high number.
Many people think that the price of BTC is more stable and that it will maintain its correlation with the precious metal in the long term. For that reason, some believe that a sharp increase is unlikely to occur.
On the contrary, Ecoinometrics analysts consider that the current situation is unusual and that the coronavirus crisis has affected all asset classes, including Bitcoin. They hope that the progressive return to normality will allow this crypto asset to resume its normal behavior and decouple from gold.
Analysts add that “another factor driving the value of Bitcoin is the devaluation of fiat currencies.” For this reason, they do not exclude that gold will also have a significant increase in its price. In any case, the analysis indicates that Bitcoin will benefit more than gold because its issuance is predefined and unalterable, among other factors.
Bitcoin Could Outperform Gold Market Cap
If Ecoinometrics’ prediction comes true, Bitcoin’s market capitalization with the price at USD 110,000 per unit will be equivalent to 20% of gold’s market capitalization.
“However, if Bitcoin is at USD 110,000, the market capitalization will be USD 2 billion. That is just above Apple’s market capitalization,” they say. They consider that there has never been another asset with so much bullish potential available to so many people. They also encourage their readers “not to miss the wave.”
Some analysts suggest that Bitcoin could exceed the market capitalization of gold. Investment firms such as Grayscale, among others, are confident that BTC will eventually reach mass acceptance and replace gold as the primary store of value.
By Alexander Salazar
