Bitcoin’s price has skyrocketed from $42,000 to $73,000 in just over a month.
The amount of money flowing into the recently approved US-based spot bitcoin exchange-traded funds (ETFs) has been even greater than expected. And investors have been piling into bitcoin in anticipation of the next bitcoin halving, which is scheduled to occur in April.
Does this mean you’ve missed your chance to invest in bitcoin?
Probably not.
And if bitcoin’s price rises the way gold’s did in the years after the issuance of the first gold ETF in the US — the SPDR Gold Trust ETF (GLD) — then the answer is “definitely not.”
Before we get to that, though, let’s first look at why we’d compare bitcoin to gold.
Gold 2.0
Bitcoin is often referred to as digital gold or “Gold 2.0.”
People often parallel bitcoin to gold because the two commodities have a lot of the same properties. They’re both decentralized in nature, have a limited supply and are hard to produce.
Also, gold has been considered a store of value for the last 5,000 years, while bitcoin is beginning to be recognized as an emerging store of value.
Gold’s post-ETF bull market
The SPDR Gold Trust ETF (GLD) came to market on November 18, 2004. From that date until late August 2011, the price of gold rallied from $442 to over $1,800.
This equates to a 307% increase over 7 years. If bitcoin’s price follows the same trend in the next 7 years, one bitcoin will be worth over $224,110 by 2031.
In this case, buying bitcoin at its current price will feel like a steal. (Remember, you can buy a fraction of a bitcoin. Each bitcoin is divisible by 100 million fractions called “satoshis,” or “sats” for short.)
There’s also the possibility that bitcoin’s price will shoot far past $224,110 by 2031, because bitcoin adoption is still in its infancy.
Bitcoin adoption is growing
As bitcoin is more widely used and adopted, the more valuable the asset will become.
Right now, only 106 million people own bitcoin globally. This equates to only 1.3% of the 8 billion people on the planet holding and using bitcoin.
In 2021, El Salvador became the first nation-state to adopt bitcoin as legal tender. Chances are, we will see this trend continue in the years to come.
Even if countries don’t officially adopt bitcoin as legal tender, the number of bitcoin circular economies — places in which bitcoin is used as the primary form of currency — continues to increase.
If more countries follow suit in embracing bitcoin, the asset’s price will likely continue to rise.
Investing in the future
When people began investing in gold via an ETF 20 years ago, gold went on a seven-year bull run — even though gold no longer has many use cases and currencies are no longer pegged to gold. Investing in gold from 2004 until 2011 was investing in how the world used to store value.
Investing in bitcoin now is investing in how the world is beginning to store value. We’re in the early innings of global bitcoin adoption, and spot bitcoin ETFs were only issued in US markets three months ago. Considering this context and despite the significant rise in bitcoin’s price during the past five weeks, you’re still early to investing in bitcoin.
Frank Corva is a cryptocurrency writer and analyst for digital assets at Finder. Frank has turned his hobby of studying and writing about crypto into a career with a mission of educating the world about this burgeoning sector of finance. He worked in Ghana and Venezuela before earning a degree in applied linguistics at Teachers College, Columbia University. He also taught writing and entertainment business courses in Japan and worked with UNICEF in Namibia before returning to the US to teach at universities in New York City. Earlier in his career, he spent years working as a publicist and graphic designer for record labels like Warner Music Group and Triple Crown Records. During that time, he was also a music journalist whose writing and photography was in published in Alternative Press, Spin and other outlets.
Every 3 months, Finder empanels a range of industry specialists to get a pulse on what the future holds for crypto. This is a summary of those findings.
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