Price Does Not Matter

There is no denying that gold has had its time to shine this year. Gold is up nearly 60% year to date while bitcoin is up just under 16%. This is a huge discrepancy and gold bugs are singing high praises as new all-time highs are consistently reached. You even see retail involved in the party as they are queuing up to purchase gold.

Yet another point for human psychology. If you don’t want it before all-time highs, you will certainly want it after! Fear of missing out (Fomo) is real.

However, this is not a comparison of the price return percentage of bitcoin to gold. If I wanted to compare, you could look at the 1-year, 3-year, 5-year, 10-year, and really any other time period to see that bitcoin has outperformed.

This is simply a scale comparison.

The biggest company by market cap in the world is NVIDIA with a $4.460 trillion market cap. Bitcoin is currently 8th on the asset list by market cap at just under $2.16 trillion.

Number one on this list is gold with a market cap of just under $29.68 trillion.

We have discussed before how humans suffer from another psychological reality, unit bias, and I believe this once again presents itself.

People are lining up outside stores to buy gold when it is over $4,000 an ounce because they think it can move upward and net them a positive return.

However, when you zoom out to market cap, you see the true difference in what needs to happen for the price to change.

Capital needs to pour in. And as US Treasury Secretary Scott Bessent put it when answering what was behind the rise in gold price, “there are more buyers than sellers.”

For context on the magnitude of gold’s upward move, at a gold price of $4,300, bitcoin to gold parity now stood at $1.5 million per bitcoin. I have been writing about this long enough that the parity line was under 1 million dollars per bitcoin. Just last week, it was $1.3 million per bitcoin.

More context:

The above is arguably the most important context. People complain constantly that bitcoin is too expensive and not worth their investment. These people are wrong. I have been consistent about my stance on bitcoin for years, and I will reiterate it once again in a single sentence:

In an ever increasingly digital and global world, the logical case is for bitcoin to pass gold in market cap.

There are many, many nuances to why bitcoin fixes all of the flaws that gold offers, but that is not the point of this. The point of this is that if you think bitcoin is too high and your investment may not be worth it, you are comparing bitcoin to the wrong thing. Bitcoin to gold has always been the comparison. Ever since President Nixon removed the gold standard from the dollar, humanity has been in a blip in the matrix of “fiat” currency. For 5,000 years before President Nixon’s Executive Order, humanity clung to gold because it was the hardest asset they could find. Wars were fought, kingdoms were destroyed, and women and tribes were conquered, all in the pursuit of gold. The time we are currently in is simply the transition from the analog world of gold to the digital world of bitcoin.

Lastly, as a retail investor, you may be concerned with day-to-day price ranges. But I can assure you that the market movers, the billionaires, the corporations, and the nation-states are not. When the time comes that they will decide to allocate 1, 5, 10, or even 50% of their portfolio to bitcoin, they will not care what price they purchase at; they will only care that they have it.

Don’t be sidelined by mental gymnastic games that don’t use the proper denominator. Gold to bitcoin is the standard of measure when viewing bitcoin as a store of value.

I am a macro guy, not a chart guy, but check out what has happened historically…

Stack SATs.

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