Bitcoin Is Not Gold 2.0 – So What Is It?
Gold has always been a sound long-term investment. Much like real estate, it’s been a safe-haven asset that shields investors in times of trouble and uncertainty. Many people are referring to Bitcoin as the new gold. However, Bitcoin is a lot more than a type of digital gold. It has been more than a year since I posted “Bitcoin Is Not Gold 2.0 – So What Is It?”. I think many who read it did not really agree with my thesis. However, it is now proving to be an accurate prediction.
In hindsight, it is always easier to make bold statements, but predicting market trends and shifts is at the heart of good investment discipline. If we look at what I suggested in that article, we can see that I thought gold would begin to leak as a store of value. I did not actually expect it to begin playing out as quickly as it has. However, when we examine the data, it will be quite clear that this is exactly what is happening right now.
Gold Price Data: What The Numbers Really Show
First, let’s look at the gold chart, focusing on the past 12 months. There has been virtually no price action in gold at a time when it should be particularly appealing. This is quite concerning. Perhaps the market will have a delayed reaction.
Over the past year, gold has lost approximately 6%, contrary to what everyone was predicting. However, not contrary to the predictions made in the post from 2020. It often gets quoted that past performance is not indicative of future performance. For some reason, many people believe this does not apply to gold. I agree that the longer the performance period, the higher the likelihood it will continue, but that does not guarantee continuation.
Why Logic No Longer Applies To Gold Investing
Markets have been pushed up in “value” by money printing, as most of the freshly printed money flows into the stock market. This is not really a realistic valuation at all. As early as 2020, companies were filing for bankruptcy while their share prices were soaring. The argument for intrinsic value is often advanced to discredit BTC.
This is rather amusing when that argument actually applies to the majority of the stock market. If a company’s shares have an enormous valuation and the company is simultaneously bankrupt, that is evidence of it. This is the reverse methodology that many praise Buffet for. He is known to seek out companies with low market valuations but significant fundamental and intrinsic value.
Bitcoin VS Gold: Which Is Better For Long-Term Wealth?
Looking at the same time frame for Bitcoin is a completely different scenario. BTC is up approximately 500% for the same period and is still likely to see further significant upside this year. The bull run is expected to run until the final quarter of 2021.
The Bitcoin chart is aggressively bullish; even if the market were to correct significantly, it would still reflect tremendous growth over a very short time period. There is obviously a fair amount of capital moving from gold to Bitcoin. As mentioned in the original article, an asset would be required that actually goes beyond preservation and actually multiplies its own value over time.
Why Bitcoin Is The Appropriate Asset For The Future
To quote a section from my original article in August 2020:
What I am suggesting is that even when the price of gold skyrockets in the upcoming hyperinflation, it will start to lose steam. The ascent will be so steep that gold will eventually be unable to remain on par in value. The discrepancy may not be catastrophic, but I believe it will no longer be able to store value. It will become outpaced, and we may see gold lose value by a couple of percent a year.
This is exactly what we are now beginning to see. Due to inflation and monetary expansion, gold needs to appreciate by at least 20% per year to maintain its store-of-value status. The true figure is likely slightly higher. This is exactly why Bitcoin is currently the best asset for the future. A borderless store of value and value transfer that is simultaneously property and multiplies its own value over time. This dynamic is largely due to the halving and is designed to repeat.
Why BTC Is Replacing Gold As The Better Investment
Bitcoin may be more than a store of value and offer other use cases, but that does not mean gold investors will not migrate to BTC. For them, their requirements are met with BTC. Statistically, you need to hold BTC for several years to experience exceptional growth, but gold investors also hold gold for multiple years. Bitcoin performs well over a 5-year horizon, while gold has stagnated for an entire decade. If you study the first chart, you will note that for an entire decade, gold produced zero gains.
Bitcoin’s preferred investment time horizon offers an attractive alternative to gold, with both immediate and long-term benefits. With gold losing its edge, BTC is clearly the asset that stands first in line to receive gold outflows. After years of stagnation, gold eventually moved in 2025 and has had an incredible run, at least for TradFi. However, context is important. Long-term investors haven’t performed well on an annual average, unlike with BTC.
Final Thoughts
Early investors in gold need to measure their returns over a decade or more. When you factor that into the equation, along with inflation, it’s a rather poor performance. On the other hand, investors who entered the market in 2024 are in a much more favorable position. Essentially, gold is a long-term investment vehicle, or at best, a store of value. However, that has not been the case. A recent rally doesn’t change gold’s performance much over a decade. It may still be a good investment. However, I would prefer Bitcoin. See you next time!