Bitcoin entered the mainstream a few years ago due to the possibility of cryptocurrency becoming the future of finance. The discussion then shifted to its viability as an asset and whether it can withstand the test of time, given its volatility.
Right now, the debate is over whether Bitcoin could become the next best inflationary hedge asset, akin to gold. Given the current state of the US dollar, that day appears to be not far off.
Bitcoin is the next gold standard.
According to recent research by Fidelity, one of the world’s largest financial services companies, the demand for Bitcoin is increasing. And at a rapid pace, given that demand for Bitcoin has been as high as it was for mobile phones.
In what way? Since global debt is exploding to new heights, there is an urgent need for an alternative asset. To combat rising inflation, an asset other than the US dollar is required.
Historically, gold has been that asset. Even after the gold standard was abolished, gold, as a good inflation hedge, continued to outperform the market.
And now it appears that Bitcoin may be joining that bandwagon as well. Bitcoin’s market cap, when combined with Gold’s, accounts for approximately 59 percent of the world’s money supply today.
Furthermore, when Bitcoin’s price is compared to Gold’s path since the end of the gold standard, it appears that BTC has been moving in a very similar manner. This, in some ways, indicates where Bitcoin’s price may be heading in the future.
What about the behavior of investors?
In general, investor participation in Bitcoin markets has grown over time. However, there have been some instances that have had a negative impact. Because sellers buy at tops and sell at bottoms, holding time for Bitcoin has decreased as young coins are sold off quickly.
Despite the volatility in price action, most HODLers remain undeterred because their numbers have been growing.
Furthermore, the movement of the Dollar index is another reason for the rise in BTC demand. It is falling at a time when other commodities, such as gold and bitcoin, are rising. As a result, it is becoming increasingly clear what people would prefer.
As a result of the aforementioned demand and supply dynamic, $1 million by 2026 is well within reach.
Popular analyst Mark Moss also weighed in on the Bitcoin and Gold vs. US Dollar debates. He claims that
“This would imply that the USD is worthless, just like the Zimbabwe note.”
On the contrary, other well-known figures, such as Ray Dalio, former co-CEO of Bridgewater Associates, continue to support Gold.
“If you put a gun to my head and said, ‘I can only have one,’ I’d choose gold.”