If there was an Olympic competition between multiple assets and bitcoin (BTC) and gold participated, which one would reach the goal first? For the director of strategies of the investment firm Fidelity Investments, Jurrien Timmer, at present the top of the podium would be occupied by the cryptocurrency, while the precious metal would ironically take the silver medal.
The executive compared what the volatility of gold was like in the 70s and what it is like for bitcoin today. According to Timmer, gold was extremely volatile on its way to profitability and also suffered ‘big falls’ quite regularly.
Both assets show similarity in terms of their “Price discovery” , something that gold went through decades ago and now it would have been the turn of bitcoin, according to Timmer.
The investor assured that the The drop that the cryptocurrency has experienced, since it hit its all-time high of $ 64,000 in April, can be seen only as a bump or hole in the road. The analyst is convinced that BTC has not finished its current bull cycle.
“Bitcoin is a relatively new product, with scarcity and network effects. Therefore, it seems logical to me that bitcoin’s rises are greater than those of gold, as are its falls. That’s the definition of price discovery, “Timmer explained through his Twitter account.
A network effect in economics it is one where the actions of one person directly influence, negatively or positively, the utility of another. That is, this type of effect occurs when the value of a good or service depends on the number of people who use it.
Under current global financial conditions, with «excess money» and «bias in returns ”, bitcoin is winning the race against gold , according to the analyst. One point that Timmer highlighted is that, although there are similarities in their behavior, there are differentiating elements to be highlighted.
The gold «bubbles», due to excess money in the 70s, are less size than current bitcoin. The reason would be because the monetary inflation of 50 years ago was much lower than the current one.
In the following graph the investor makes this correlation and concludes that “bitcoin and gold are different players on the same team.” Timmer clarified that his theory does not mean that gold does not have significant upside potential.
Bitcoin, from “adolescent” to “adulthood”
After being presented in 2008 by Satoshi Nakamoto, bitcoin he would not be entering his “adolescence” at 13 years old. For Timmer, BTC is an “aspiring” asset that would be coming of age rather, a characteristic that it would share with gold.
The investor, who in the past has defended cryptocurrency, clarified: “Adolescents are full of potential, but they can also destroy your vehicle.”
On the comparisons between bitcoin and gold CriptoNoticias has published multiple reports from analysts who have fixed their position . An eToro report released in April this year assured that bitcoin will become the digital gold of the new era.