Bloomberg Intelligence Senior Commodity Strategist Mike McGlone has suggested that gold might overshadow Bitcoin by 2024, amidst the uncertainty surrounding the potential launch of Bitcoin ETFs. He highlighted the ongoing debate between Bitcoin and gold, indicating that the rules of the game could be changed by Bitcoin ETFs.
McGlone’s comments focus on the expected dynamics between Gold and Bitcoin in the coming year, particularly in the context of the anticipated launch of a Bitcoin Exchange Traded Fund (ETF) spot. He notes that the crypto market, led by Bitcoin, influenced the performance of various risky assets in 2022 but showed signs of recovery in 2023, raising questions about a possible reversal in market behavior due to Bitcoin’s high market beta status.
Market beta measures the sensitivity of a token to general market movements. In Bitcoin’s case, its performance is often closely linked to broader market trends, making it susceptible to fluctuations in risk sensitivity. McGlone suggests that analyzing the Bitcoin/gold cross, which demonstrates the comparative behavior of the two tokens during different market conditions, could guide predictions of a potential reversal in very low exchange volatility.
Traditionally, gold is viewed as a safe haven, a hedge against economic crises, and a store of value. Its price surged impressively to $2,100 per ounce in 2023, reinforcing its status as a reliable investment during recession fears. Gold’s historical resilience during economic turmoil makes it a preferred asset for risk-averse investors.
Meanwhile, Bitcoin has made waves in the crypto market as digital gold, especially in light of a potential Bitcoin ETF approval. Its decentralized nature and limited supply attract investors seeking an alternative store of value. However, Bitcoin’s journey is marked by extreme price volatility, often exceeding that of traditional assets. Despite McGlone’s stance, leading figures like Blockstream CEO Adam Back predict a future where digital gold represented by Bitcoin could surpass the value of physical gold, with Back estimating that a price of approximately $700,000 could trigger this shift.