Because of these key differences, Bitcoin may catch up to the gold rally.
Bitcoin has been called “digital gold”, and some of its key properties may help BTC accumulate a higher percentage than the precious metal.
Bitcoin (BTC) has significantly underperformed gold (XAU) over the past year, down 13.25% compared to the precious metal's nearly 100% rally. Can BTC outperform gold?
Main Receptors:
The supply of bitcoins is limited to 21 million, with about 1 million left to be mined.
Gold miners increase production when prices rise, unlike Bitcoin mines.
Bitcoin's small size compared to gold magnifies any potential even from small real estate positions.
The supply of Bitcoin is not based on demand
Bitcoin withdrawals do not respond to high prices like gold.
The protocol will issue new BTC on a fixed schedule, which will be halved over time to reach a supply cap of 21 million.
Miners can add or remove machines, but the problem with the network is that they cannot change how many coins.
“The problem with gold as a long-term treasury asset is fixing it and not having a problem with halving,” said Pierre Rochard, CEO of Bitcoin Bonds.
“As the price of gold rises, more capital will be invested in new gold mining projects and accelerate the supply of gold above ground.”
According to the World Gold Council, over the past 25 years, world gold production has increased from 2,300 tons in 1995 to more than 3,500 tons in 2018.
It will peak at 3,672 tonnes in 2025.
In the year By the end of 2025, 93% of BTC had already been mined, with an annual inflation rate of around 0.81%. According to Bitbo data, it may drop to 0.41% after the next BTC halving in March 2028.
Gold Market Price Drops Bitcoins.
As of January, Bitcoin's value was only about 4.30% of the $41.69 trillion market value of gold.
If investors pre-purchase gold for strong asset exposure, currency hedging, geopolitical risk or long-term purchasing power protection, Bitcoin may still attract margin allocation.
According to Jeff Walton, chief risk officer of BTC treasury firm Strive, bitcoin only needs a modest amount of gold-type demand to turn into BTC.
In a smaller marketplace, that marginal interest can translate into a larger percentage of activity.
Related: Brazil's Largest Private Bank Recommends Investors Allocate 3% to Bitcoin by 2026
In theory, a 5% flip from gold to Bitcoin has over $2 trillion in revenue, implying a 116.25% upside in BTC's market cap and a price target of around $192,000, based on current valuations.
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