On April 22, Willy Woo, an on-chain analyst, posted via X that the tides are turning in the age-old battle between gold and Bitcoin.

While gold has enjoyed a 6,000-year reign as a scarce asset, advances in mining technology have eroded its scarcity narrative, due to the accelerated rate of production in recent decades.

On April 22, Bitcoin analyst Willy Woo published the following:

“Gold production going to the moon as technology gets better. Gold has had 6000 years of being scarce. That changed as we moved into the industrial age.

Bitcoin supply growth dropped below gold this week, it’s only get scarcer.

Yup, this fundamental premise of S2F valuation.”

Gold versus Bitcoin: Which is a Better Store of Value?

Bitcoin supply is declining as gold risks becoming oversupplied in the coming years. With the halving event on April 20, the BTC shortage will be even more pronounced in the coming years.

Since its launch, the Bitcoin network has reduced the daily emission to miners through Halving. In the fifth epoch, the network rewards 3,125 BTC to each successful miner or mining pool every 10 minutes. This rate is down 50% since epoch four, when rewards were 6.25 BTC per block.

Generally, gold and Bitcoin are considered safe haven assets. However, over the last few centuries, the scarcity of gold has made it the preferred store of value for banks and countries. Almost all central banks in the world have gold in their reserves.

Due to the increasing rate of production from technological advances, though, Woo now believes that gold holders will face difficult times in the coming years as new supply floods the market. Woo supports Bitcoin, a digital asset considered digital gold due to its predetermined and transparent issuance schedule.

Traditional gold investors have failed to recognize that the yellow metal is a “slow shot” that will develop over the next decade, Woo says.

For analysts, in general terms, both assets are “incomparable,” as the economist Gustavo Martinez explains on his social networks, “when the duration collapses and the Nasdaq gives up more than 2%: Bitcoin corrects. Furthermore, he asks “What happens when the duration collapses and BTC too?”, to which he responds: “Gold doesn’t even move or rise.” This, he explains, simply and plainly, is justified by the fact that crypto is a risk asset and gold is a store of value.

However, Goldman Sachs has a different view, according to which the world’s most famous cryptocurrency could reach 50% of the store of value market in the next five years. Thus, Sachs argues that compared to gold, Bitcoin holds 20% of the current “store of value” market, although the growing adoption of digital assets would drive that percentage up rapidly.

Is BTC Preparing for a Strong Rally?

In another post on X, Woo argues that Bitcoin’s price ratio suggests the currency is preparing for a mega run up. The rally, the analyst continues, has not even begun despite Bitcoin rising to $73,800 in March 2024.

The rise in the coin’s valuation above the previous all-time high of $70,000 was a departure from historical performance. Still, if history guides and prices rise further in the current era, a new all-time high will be recorded in line with Woo’s projections.

Analyzing how Bitcoin’s price ratio performed relative to previous halving events, Woo now believes that the current rally will be a unique combination of strong demand and market dominance.

By Leonardo Perez


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