Financial analyst Luke Mikic believes Bitcoin is unlikely to replicate gold’s over 600% price surge in the 8 years following the approval of a gold-backed ETF in 2004.
“The Bitcoin ETF was just approved & many people believe Bitcoin can repeat what gold did between 2004 & 2012. After the gold ETF was approved, it rallied by more than 600% in 8 years. Here are the 3 reasons why Bitcoin WILL NOT repeat what gold did in the 2010s,” tweeted Mikic, a self-described “9-5 Escape Artist.”
What you'll learn 👉
Time and Technology Differences
The first reason, according to Mikic, relates to differences in timing and technological adoption curves. “Think back to 2004 when the gold ETF was launched & ask yourself what network effects did gold have? None,” he tweeted, arguing gold did not benefit from network effects in the 2000s as stocks and property were more popular investments.
By contrast, Mikic contends Bitcoin is currently being adopted even faster than the internet was in the 1990s. With the internet reaching mass adoption in under 30 years, he questions if Bitcoin could follow a similar trajectory.
Verifiable Scarcity
Mikic also argues Bitcoin’s verifiable scarcity makes its potential greater than gold’s. He points out there are “more than 200 paper contracts of gold for every 1 physical contract,” limiting gold’s price discovery and multiplier potential.
Bitcoin’s scarcity is different, with available supply on exchanges “at its lowest level since 2016.” Mikic sees this “coiling the spring” for Bitcoin’s multiplier effect, currently at an all-time high of 4.75x.
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Show more +Halving Event and Monetary Transition
Finally, Mikic highlights Bitcoin’s upcoming “halving” event, stating: “In 70 days Bitcoin is going to become the MOST scarce asset on the planet after its halving. Bitcoin will have a stock-to-flow ratio of 114:1″—higher than gold’s ratio of 60.
Since no other asset has been rarer than gold in the past 5,000 years, Mikic believes few grasp the impact Bitcoin’s transition to superior scarcity will have, especially regarding its potential 2025 cycle highs.
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