According to a Fidelity executive, bitcoin will surpass the gold market by 25% in a $500 billion gain.
Fidelity’s macro expert predicts that Bitcoin’s total value of $1 trillion will eventually increase by another $500 billion. Bitcoin is frequently likened to gold due to its scarcity and similar characteristics as a store of value. This projection aligns with other forecasts that draw comparisons between Bitcoin’s potential and that of gold.
Jurien Timmer, director of global macro at Fidelity, suggests that Bitcoin could eventually represent around a quarter of the current gold market owned by banks and private investors. He anticipates that the world’s largest cryptocurrency could attain a value of $1.5 trillion, as reported by X on Thursday. This figure exceeds the current value of all bitcoins in circulation by $500 billion.
Bitcoin’s comparison to gold stems from the perception of both assets as stores of scarcity, durability, and value. Timmer states, “Bitcoin will eventually capture about a quarter of the financial gold market.” He estimates that financial gold, which constitutes approximately 40% of the total gold above ground, is currently valued at about $6 trillion.
The term “monetary gold” refers to the precious metal held by central banks, financial institutions, and governments to support the value of a country’s currency. This gold can exist in the form of physical bars or coins.
On February 14, Bitcoin surpassed the $1 trillion mark for the first time in over two years, sparking speculation among analysts about its trajectory over the next 18 months. Anthony Scaramucci, founder of SkyBridge Capital, has previously suggested that Bitcoin’s total value could reach half that of gold.
Fidelity executives based their analysis on a variant of the stock-to-flow model, commonly used in commodity markets, to illustrate Bitcoin’s scarcity and value proposition relative to gold. This model compares the current stock of a product to the flow of new production. For Bitcoin, it compares the current available currency to the flow of new coins produced through mining activity, capped at 21 million coins.
While the stock-to-flow model attempts to forecast Bitcoin’s price, critics argue that it fails to fully account for changes in the asset’s market dynamics. Factors such as investor sentiment and regulatory changes can also influence Bitcoin prices, diminishing the model’s reliability.
Timmer also acknowledges that while Bitcoin’s growth has aligned with the stock-to-flow model thus far, it may not continue to do so once the cap of 21 million coins and new coin production cease. Current estimates suggest that the last halving event will occur in 116 years, around 2140, when all available bitcoins are expected to be mined.
It’s worth noting that Bitcoin and gold often exhibit different trading patterns. Bitcoin tends to track riskier assets like the tech-heavy Nasdaq, while gold’s performance correlates with signs of market downturn. This year, gold has seen a 2% decrease, while Bitcoin and the Nasdaq have risen by 16% and 8.6%, respectively.
