Bitcoin's roadmap towards Gold Flippening

[d5000]

Bitcoin is seen by many as a potential alternative to gold. But still, Bitcoin's market cap of roughly 800-1400 trillion (in 2024) is about or less than 10% of "the value of all gold in the world".

There was already a thread some months ago about when Bitcoin could reach a market cap similar to gold. Unfortunately, without a poll attached, so I'll attach it to this thread.


In this thread however I want to focus on a slightly different thing: What must happen for Bitcoin to be considered a real competitor for gold by investors?

My theory is that there are a handful of main events which could definitely pave the road towards the gold flippening. Here they are:

1. Bitcoin has to reaffirm its status as the leading cryptocurrency.

"Bitcoin is scarce", they say. One of the weaknesses of this theory however is that in theory an altcoin could claim the same thing. One thing investors will for sure take into account if they consider Bitcoin as a gold alternative is the distance with respect to close contenders. In this case, mainly the distance in market cap versus Ethereum's.

And in this metric Bitcoin has progressed in the recent years and even in the recent months - despite of the Ethereum ETF approval, an ETH/BTC flippening looks more unlikely than ever. Above all in phases of market weakness like in early August. Bitcoin Dominance has increased from 49 to 57% in the recent year (since August 2023), while ETH's decreased from 19% to less than 15%.

Status: On track, almost done

2. Bitcoin's supply inflation has to be lower than gold's.

In the current 2024-28 halving period, Bitcoin's supply has a yearly inflation of 0.83 % roughly (19.7 milllion BTC are circulating vs. ~164360 BTC mined each year).  Gold production had been around 3000 metric tons in 2023. Current available gold is estimated at 210000 metric tons (most recent confirmed estimations from 2017 are about 190000). This means a "gold supply inflation" of 1.4% per year.

In short: Since the current halving period, Bitcoin is less inflationary than gold. The difference (0.83% vs 1.4%) could even be larger, because some Bitcoins are lost each year, while for gold this is quite unlikely. 

Status: Done

3. Bitcoin's volatility has to approach gold's

One of Bitcoin's biggest problems are the sharp price swings. Investors considering BTC an alternative for gold may fear the deep crashes we see each couple of years, sometimes tied to some news events, like in 2022, but sometimes also coming out of nowhere and probably caused by massive cyclic profit taking, like in 2018.

60-day volatility is currently at around 2.5 to 3 %. This is way superior than gold's around 1% (chart is available at the Bitbo site, too). There's however good news: Bitcoin's volatility is declining, while gold's is quite stable (yellow=BTC, orange=gold). And there was a moment in later 2023 where both were already quite close (Bitcoin 1.9%, Gold 1.4%):



Status: Improving, but still some way to go


What do you think? Do you agree on these points? There are items some other people may consider important, like acceptance by institutional investors, and even Bitcoin being hold by governments, but I'm more skeptic towards these indicators.

[Stablexcoin]

Your points are clear and I agree with them but let us not forget that global acceptance is also a factor. If people don't accept Bitcoin it is likely impossible.

It's already happening gradually but we do not see it. Bitcoin is already surpassing gold bit by bit since more people are willing to accept Bitcoin to have true value compared to Gold. If Bitcoin could go from 1 trillion to 2 trillion in the next decade then it is possible for the flippening.

[Lucius]

~snip~
1. Bitcoin has to reaffirm its status as the leading cryptocurrency.

"Bitcoin is scarce", they say. One of the weaknesses of this theory however is that in theory an altcoin could claim the same thing. One thing investors will for sure take into account if they consider Bitcoin as a gold alternative is the distance with respect to close contenders. In this case, mainly the distance in market cap versus Ethereum's.

And in this metric Bitcoin has progressed in the recent years and even in the recent months - despite of the Ethereum ETF approval, an ETH/BTC flippening looks more unlikely than ever. Above all in phases of market weakness like in early August. Bitcoin Dominance has increased from 49 to 57% in the recent year (since August 2023), while ETH's decreased from 19% to less than 15%.

Status: On track, almost done

I personally believe that BTC has long been positioned as the leading cryptocurrency, and that the first follower is where it is only for two reasons - the first reason is that it has about x6 more coins in circulation, and the second is that it does not actually have a max supply. Let's say that there is a third reason, and that is the transition from PoW to PoS, with which VB shot itself in both knees and showed how "green" it really is, or maybe it's better to say manipulated by the "green lobby".

2. Bitcoin's supply inflation has to be lower than gold's.

In the current 2024-28 halving period, Bitcoin's supply has a yearly inflation of 0.83 % roughly (19.7 milllion BTC are circulating vs. ~164360 BTC mined each year).  Gold production had been around 3000 metric tons in 2023. Current available gold is estimated at 210000 metric tons (most recent confirmed estimations from 2017 are about 190000). This means a "gold supply inflation" of 1.4% per year.

In short: Since the current halving period, Bitcoin is less inflationary than gold. The difference (0.83% vs 1.4%) could even be larger, because some Bitcoins are lost each year, while for gold this is quite unlikely. 

Status: Done

The difference between the "production" of gold and BTC is incomparable for the reason that estimates of the amount of gold are only speculations, and those who produce gold can very easily influence the price of gold by controlling how much new gold comes to the market. In addition, I doubt that countries like China publicly announce how much gold they have and how much they actually mine, so I think there is much more gold than the official statistics show.

Bitcoin is the opposite of that, it is about numbers and protocols that are more than clearly defined - which means that a few hundred thousand or a million more BTC cannot appear at some point because someone found them.

3. Bitcoin's volatility has to approach gold's

One of Bitcoin's biggest problems are the sharp price swings. Investors considering BTC an alternative for gold may fear the deep crashes we see each couple of years, sometimes tied to some news events, like in 2022, but sometimes also coming out of nowhere and probably caused by massive cyclic profit taking, like in 2018.

60-day volatility is currently at around 2.5 to 3 %. This is way superior than gold's around 1% (chart is available at the Bitbo site, too). There's however good news: Bitcoin's volatility is declining, while gold's is quite stable (yellow=BTC, orange=gold). And there was a moment in later 2023 where both were already quite close (Bitcoin 1.9%, Gold 1.4%):



Status: Improving, but still some way to go

My opinion is that this is the biggest challenge of all, because it is hard to expect BTC volatility to disappear, because those who trade with BTC count on it to make a profit. Gold will very likely continue to be a safe choice for investors, while BTC will be something that many investors will see only as something in which they can seek a quick profit for some time to come.

What do you think? Do you agree on these points? There are items some other people may consider important, like acceptance by institutional investors, and even Bitcoin being hold by governments, but I'm more skeptic towards these indicators.

I believe that the attitude of the world's most powerful governments towards BTC will also play a significant role in a possible flippening - because only private investors and small buyers will hardly turn things around if there is no political support. On the other hand, such a development would mean that politics will increasingly try to control Bitcoin.

[d5000]

[...]global acceptance is also a factor.

Good point, it is a factor - if we have extreme regional disparities in Bitcoin acceptance the "gold flippening" won't happen. But I think with the exception of China and some few other countries the acceptance of BTC is already "leveling", i.e. becoming more popular on all continents, and this could already be enough.

I personally believe that BTC has long been positioned as the leading cryptocurrency, and that the first follower is where it is only for two reasons - the first reason is that it has about x6 more coins in circulation, and the second is that it does not actually have a max supply. Let's say that there is a third reason, and that is the transition from PoW to PoS, [...]

I slightly disagree here: if the growth formula was restrictive enough (like the "tail emission" on Monero for example) not having a max supply should not really impact on the potential to be a good store of value, because taking into account lost coins this inflation in the long run will probably be negligible. Bitcoin's publicly known max supply however can be a strong psychological factor.

The difference between the "production" of gold and BTC is incomparable for the reason that estimates of the amount of gold are only speculations

At least the rate in the OP was calculated taking into account the gold that already was extracted. There may be differences in estimations regarding the gold "sunk" in jewellry and industrial applications for example, but I think at least this value should not be that far from reality.

However in my opinion you're right about the second point:

Bitcoin is the opposite of that, it is about numbers and protocols that are more than clearly defined

Exactly that's imo a strong pro-Bitcoin factor, which can play in favour of BTC once investors are considering it as a real alternative.

My opinion is that this is the biggest challenge of all, because it is hard to expect BTC volatility to disappear, because those who trade with BTC count on it to make a profit. Gold will very likely continue to be a safe choice for investors, while BTC will be something that many investors will see only as something in which they can seek a quick profit for some time to come.

Good point. Like you correctly point out the high volatility depends highly on the predominant speculative investment strategy, often leveraged, which exaggerates price swings even more due to liquidations.

Volatility reduction strategies should be discussed much more.  It's difficult to imagine them but I've thought about this topic for years and the following options could be promising:

- Increased liquidity through more "use as a currency",
- more option trading, including decentralized options like outlined here by @aliashraf, with high liquidity of these products making them more usable for average retail investors to hedge against crashes,
- other financial derivatives like discreet log contracts and DLCFDs, with the same goal,
- merchants (above all service and digital goods providers) operating as "Bitcoin backers" via specific "special offer/promotion" strategies
- development of software suites to live "bankless", using BTC as a saving strategy
- promoting hodling and DCAing, but not "hoard and sell" behaviour
- development of financial products based on long Bitcoin moving averages. Imagine you could invest in the Bitcoin SMA-500 or so, risk would be minimized.

I believe that the attitude of the world's most powerful governments towards BTC will also play a significant role in a possible flippening - because only private investors and small buyers will hardly turn things around if there is no political support.

I agree regarding "political support", at least governments recognizing that BTC is a legitimate asset without trying to damage its markets is important. And small Bitcoin reserves (in the order of magnitude of thousands, not millions of BTC) could also be helpful. My more "skeptical" remark was directed to those who think that Bitcoin must be held massively as reserve by central banks, because like you, I suspect there could be a more "interventionist" attitudes by governments in this case.

[Lucius]

I personally believe that BTC has long been positioned as the leading cryptocurrency, and that the first follower is where it is only for two reasons - the first reason is that it has about x6 more coins in circulation, and the second is that it does not actually have a max supply. Let's say that there is a third reason, and that is the transition from PoW to PoS, [...]

I slightly disagree here: if the growth formula was restrictive enough (like the "tail emission" on Monero for example) not having a max supply should not really impact on the potential to be a good store of value, because taking into account lost coins this inflation in the long run will probably be negligible. Bitcoin's publicly known max supply however can be a strong psychological factor.

However, if we take into account all of the above, we see that investors in ETH are not too optimistic even when they received a spot ETF - I guess this clearly suggests that trust in BTC is far greater than any altcoin. If we also look back, then the data clearly shows us that BTC grew by about 100% in relation to the period of 3 years, while ETH lost more than 60% of its value in that period.

The difference between the "production" of gold and BTC is incomparable for the reason that estimates of the amount of gold are only speculations

At least the rate in the OP was calculated taking into account the gold that already was extracted. There may be differences in estimations regarding the gold "sunk" in jewellry and industrial applications for example, but I think at least this value should not be that far from reality.

However in my opinion you're right about the second point:

Bitcoin is the opposite of that, it is about numbers and protocols that are more than clearly defined

Exactly that's imo a strong pro-Bitcoin factor, which can play in favour of BTC once investors are considering it as a real alternative.

Gold has another "disadvantage", which is called fake gold, and it is no secret that it exists on the market, although the amount is impossible to estimate - on the other hand, there is no fake BTC, unless you take into account the few BTC forks that they are still somehow holding on to life.

If we look into the future, research in space shows that huge amounts of gold could be found on asteroids, although they say that practical mining of this type could only be achieved in about fifty years, but the fact is that there is gold outside our planet.

My opinion is that this is the biggest challenge of all, because it is hard to expect BTC volatility to disappear, because those who trade with BTC count on it to make a profit. Gold will very likely continue to be a safe choice for investors, while BTC will be something that many investors will see only as something in which they can seek a quick profit for some time to come.

Good point. Like you correctly point out the high volatility depends highly on the predominant speculative investment strategy, often leveraged, which exaggerates price swings even more due to liquidations.

Volatility reduction strategies should be discussed much more.  It's difficult to imagine them but I've thought about this topic for years and the following options could be promising:

- Increased liquidity through more "use as a currency",
- more option trading, including decentralized options like outlined here by @aliashraf, with high liquidity of these products making them more usable for average retail investors to hedge against crashes,
- other financial derivatives like discreet log contracts and DLCFDs, with the same goal,
- merchants (above all service and digital goods providers) operating as "Bitcoin backers" via specific "special offer/promotion" strategies
- development of software suites to live "bankless", using BTC as a saving strategy
- promoting hodling and DCAing, but not "hoard and sell" behaviour
- development of financial products based on long Bitcoin moving averages. Imagine you could invest in the Bitcoin SMA-500 or so, risk would be minimized.

You have very good ideas, probably someone has in mind to realize them (if they haven't already), but I think it will be difficult for us to move Bitcoin away from the idea that has already taken root in the mainstream, that BTC is only a speculative asset that is strongly supported by the US lobby. If we take into account that BTC spot ETFs are one of the main drivers that affect the price, then "they" will at any cost want to preserve the volatility that brings them and their clients profit.

I believe that the attitude of the world's most powerful governments towards BTC will also play a significant role in a possible flippening - because only private investors and small buyers will hardly turn things around if there is no political support.

I agree regarding "political support", at least governments recognizing that BTC is a legitimate asset without trying to damage its markets is important. And small Bitcoin reserves (in the order of magnitude of thousands, not millions of BTC) could also be helpful. My more "skeptical" remark was directed to those who think that Bitcoin must be held massively as reserve by central banks, because like you, I suspect there could be a more "interventionist" attitudes by governments in this case.

I think that BTC will have a somewhat green light as long as "they" do not consider it a threat, and a few years ago when there was that fight about FB Libra coin, one congressman stated in the context of BTC that "it's just a little baby" which somewhat suggests what they thought then, although I don't think they think much differently even today.

What is happening in the US today when it comes to BTC is perhaps just pre-election politics with the intention of winning every possible vote - but if we look at the bigger picture in the last 2-3 years, we can still see that the attitude towards cryptocurrencies has changed in terms of strict control towards CEXs, that the majority of trading takes place through spot ETFs and that more than a third of the mining farms have again concentrated in one country.

Of course, this does not mean that we have lost decentralization, but still too much is concentrated in one place.

[STT]

I think this question misses a few fundamentals so I will only briefly mention them.  I do think BTC appreciates but its obvious gold will do the same, the gap might reduce but the idea BTC takes over gold in some way I never agreed with just because they are very different assets.

Bitcoin must be used, its usage and monetary velocity is which gives it most value.  If all just held, I think the value at least halves.  Contrast to gold is it is largely just held in vaults across multiple decades.   Some gold bought and stored before the last world war has not been moved or used since that time.   Again very different conditions between the two.

The main buyer for BTC is people who either wish to use it or take part in some way of speculating on the future greater demand and usage.   Bitcoin will be used more in future.   Gold is in the majority bought then stored by central banks & a positive trend for this has existed for a quarter centry, their average period of holding is forever.   A country in distress sells its gold but mostly that is not the intention, its used inversely as an asset on a balance sheet not directly.

If we suppose asset worth has no usage in a future economy, maybe everything changes perhaps the world discovers and implements free energy and everything alters then.   Then gold will move opposite to an asset like Bitcoin, it will decline as other more modern usage appreciates then we flip.   Till that happens I only see prices altering not ratios reversing.

[d5000]

[...] trust in BTC is far greater than any altcoin.

I agree here. My remark was only about the concept of tail emission being probably not that important.

probably someone has in mind to realize them (if they haven't already)

This depends on the exact item, afaik:

- Financial hedging with put options of course already exists and is growing. DLCs (Discreet Log Contracts) are already being implemented as a hedging strategy but afaik aren't really popular still. They have also some advantages.
- the merchants "backing" seems to be already used by freelancers offering services but I've not seen it with merchants who sell goods, not even digital goods,
- "use as a currency" and DCAing are promoted by many, but still I think it's a minority following these advice (but that could change over time, see below)
- MA-based products is something I haven't seen anywhere, but I may be wrong. If you (or anybody reading here) knows platforms offering "exotic" Bitcoin derivatives, either centralized (Deribit-style) or decentralized (e.g. via LN), feel free to post them here

[...]but I think it will be difficult for us to move Bitcoin away from the idea that has already taken root in the mainstream, that BTC is only a speculative asset that is strongly supported by the US lobby. If we take into account that BTC spot ETFs are one of the main drivers that affect the price, then "they" will at any cost want to preserve the volatility that brings them and their clients profit.

I'm not so sure about ETF buyers all being searching for volatility.

Bitcoin (in particular via the ETFs) is promoted in some circles as an asset you should own to diversify and hedge against other asset's weaknesses. I don't think a pension fund is particularly interested in volatility. What they probably want is participate from Bitcoin's growth, not profiting from leveraged trading.

You could argue Bitcoin's quite steep growth rate over the years is also a form of volatility. But it's not the growth over the years which is still holding it back imo, but the price swings caused by FOMO, fear and panic. The risk to buy in just in a FOMO move to then lose to a panic-caused downside move (if you can't just hodl for some years) is real.

I unfortunately don't know which "buyer type" for Bitcoin ETFs is currently more prevalent. What we see however is that volatility is very slowly lowering, and thus the attractiveness for Bitcoin "because of its volatility" is decreasing. Retailers talk all the time about DCA and hodling, and that's a good thing and shows they're interested in longer term growth and not so much into speculative short-term gains. ETF buyers could also lean gradually to the "long term growth" oriented buyer type.

In general thus I'm quite optimistic that things could be changing in the direction of the OP. However I'm not sure about the timeframe this could take.

Bitcoin must be used, its usage and monetary velocity is which gives it most value.

This is an excellent point. In fact I'm promoting "usage as a currency" all over the forum And perhaps I should have included the point in the OP.

My own "justification" for this point is that Bitcoin's main advantages, censorship resistance and independence from middlemen, is most useful for "usage as a currency", not for a speculative asset. And thus it should, in theory, the aspect driving its value.

However, I disagree slightly with you that Bitcoin can't compete with gold on the "store of value" market and eventually "surpass" it there. There is already a strong narrative about Bitcoin as "digital gold" (just recently a new thread popped up for example). My take on the differences between Bitcoin and gold is that Bitcoin can fulfill gold's main purpose (store of value), but it's not as dependant from that use case as gold. Gold has of course also some other usage (jewellry, industrial use) but its value is probably extremely dependent on central banks not selling their gold.

Bitcoin would benefit most in a scenario where advances in scalability technology make an usage as a currency more attractive, and at the same time people can use it for savings because its volatility goes down to acceptable levels.

If we suppose asset worth has no usage in a future economy, maybe everything changes perhaps the world discovers and implements free energy and everything alters then.   Then gold will move opposite to an asset like Bitcoin, it will decline as other more modern usage appreciates then we flip.

Not sure I understand this scenario completely, but I'll think about it.

[tabas]

3. Bitcoin's volatility has to approach gold's

One of Bitcoin's biggest problems are the sharp price swings. Investors considering BTC an alternative for gold may fear the deep crashes we see each couple of years, sometimes tied to some news events, like in 2022, but sometimes also coming out of nowhere and probably caused by massive cyclic profit taking, like in 2018.

60-day volatility is currently at around 2.5 to 3 %. This is way superior than gold's around 1% (chart is available at the Bitbo site, too). There's however good news: Bitcoin's volatility is declining, while gold's is quite stable (yellow=BTC, orange=gold). And there was a moment in later 2023 where both were already quite close (Bitcoin 1.9%, Gold 1.4%):

I think that we're already going to that point and based on the historical charts of Bitcoin, we're having a lesser multiplier for every bull run that's coming. For example of the 2017 bull run, the peak was $20k and then we've got $69k last 2021 bull run and that's around 3.5x. Compared to the past, they're a lot, and before 2017, there was the 2013 peak of $1200 and that's 16.5x of multiplier for BTC. I have read a discussion about this before that soon we might see a stabilized price for Bitcoin but we don't know when and this 2024-2025 bull run, from $69k in 2021, if we get to see 2x-2.5x multiplier, that's still a lot and holders still win by that time but the pattern speaks about its decreased of gains. But the counterpart of this is, we get to see higher lows.

[OgNasty]

I think looking at the growth and numbers it is technically possible for Bitcoin to flip gold in 2033, but I doubt it. Honestly, I think we’re likely to see a collapse of the mining market and a deep price correction before flipping gold, which would likely push the date closer to 2041, but there are so many hurdles to get over before then, it’s just a thought experiment at this point.

[d5000]

I think that we're already going to that point and based on the historical charts of Bitcoin, we're having a lesser multiplier for every bull run that's coming.

This is true. However, downside volatility in each cycle continues to be high and decreases much slower. While the 2011 bear lost about 93% (32 to 2$), 2013-15 bear lost 88% (1150 to 135), the 2017-18 bear 85% (19600 to 3000) and the 2021-22 bear 77% (69000 to 15500). This looks still very substantial.

Thinking again however, if we look at the value Bitcoin preserved at the lowest point compared to the previous ATH, then the tendency looks much more positive: 7% in 2011, 12% (80% more!) in 2015, 15% in 2018, and 23% (again a substantial increase of 50%!) in 2022.   USD Inflation in 2022 was however higher, so this increase was probably a bit inflated, but anyway I think the value would have ended above 20%.

Honestly, I think we’re likely to see a collapse of the mining market and a deep price correction before flipping gold, which would likely push the date closer to 2041,[...]

Interesting point. So if I interpret right, you see the mining industry currently in a bubble. Not the first time I read this (publicly listed mining companies growing diluting their shares while their income isn't enough anymore to sustain their installations - that was the possible reason I read about some months ago). And thus, to be able to converge to a stabler behaviour and rival gold, this bubble must first deflate.

I could counter-argue here however that miners aren't that important on the supply side than there were before, and their importance decreases with each halving (and even with each block to be exact). So a "mining collapse" would have less incidence in the market every year.

You probably refer however to that they could sell all their reserves (estimated at > 1.8 million) in a relatively short time. But isn't this already happening, but very gradually? At least in the last 2 years (since late 2022), miners were selling more than their income, according to onchain analysts.

My take is that in the 1-2 years around the halvings, miners will sell a substantial part of their reserves, and the slow build upof new reserves in the rest of the years of the halving cycle will not be enough to reach the level before. Thus also with this in mind, I think the potential for a significant market disruption is decreasing over time.

The potential for us to see a "big collapse" vs. a "gradual decline" in my opinion also depends on the efficiency differences between miner groups. This means, if mining further centralizes in the US, the potential for such a collapse is higher than with a relatively geographically distributed miner population.

[tabas]

I think that we're already going to that point and based on the historical charts of Bitcoin, we're having a lesser multiplier for every bull run that's coming.

This is true. However, downside volatility in each cycle continues to be high and decreases much slower. While the 2011 bear lost about 93% (32 to 2$), 2013-15 bear lost 88% (1150 to 135), the 2017-18 bear 85% (19600 to 3000) and the 2021-22 bear 77% (69000 to 15500). This looks still very substantial.

Thinking again however, if we look at the value Bitcoin preserved at the lowest point compared to the previous ATH, then the tendency looks much more positive: 7% in 2011, 12% (80% more!) in 2015, 15% in 2018, and 23% (again a substantial increase of 50%!) in 2022.   USD Inflation in 2022 was however higher, so this increase was probably a bit inflated, but anyway I think the value would have ended above 20%.

It's interesting how it would look by 2025. If it hits the pattern we're surely gets close to those numbers that we're projecting. And you've mentioned that one factor that also plays a part in these cycles and patterns that we're looking at, the inflation. As it gets higher year by year, somehow at some point it gives a positive impact for Bitcoin.

[Stablexcoin]

I think that we're already going to that point and based on the historical charts of Bitcoin, we're having a lesser multiplier for every bull run that's coming.

This is true. However, downside volatility in each cycle continues to be high and decreases much slower. While the 2011 bear lost about 93% (32 to 2$), 2013-15 bear lost 88% (1150 to 135), the 2017-18 bear 85% (19600 to 3000) and the 2021-22 bear 77% (69000 to 15500). This looks still very substantial.

Thinking again however, if we look at the value Bitcoin preserved at the lowest point compared to the previous ATH, then the tendency looks much more positive: 7% in 2011, 12% (80% more!) in 2015, 15% in 2018, and 23% (again a substantial increase of 50%!) in 2022.   USD Inflation in 2022 was however higher, so this increase was probably a bit inflated, but anyway I think the value would have ended above 20%.

It's interesting how it would look by 2025. If it hits the pattern we're surely gets close to those numbers that we're projecting. And you've mentioned that one factor that also plays a part in these cycles and patterns that we're looking at, the inflation. As it gets higher year by year, somehow at some point it gives a positive impact for Bitcoin.

Very logical in your thinking. It is important to speculate and predict based on previous cycles and use it as a hint. But at some point, we should try to be realistic and remember that Bitcoin may not follow recent patterns this time around. A lot of people believe that every 4 cycles Bitcoins beat the old ATH and climb to a new ATH. What if it is different these times? What if these cycles could be from 5 years and above? I strongly believe that inflation is a huge factor that will impact the price of Bitcoin and this is because of the purchasing power. If there is inflation, Bitcoin will increase as well.

[Lucius]

[...]but I think it will be difficult for us to move Bitcoin away from the idea that has already taken root in the mainstream, that BTC is only a speculative asset that is strongly supported by the US lobby. If we take into account that BTC spot ETFs are one of the main drivers that affect the price, then "they" will at any cost want to preserve the volatility that brings them and their clients profit.

I'm not so sure about ETF buyers all being searching for volatility.

Bitcoin (in particular via the ETFs) is promoted in some circles as an asset you should own to diversify and hedge against other asset's weaknesses. I don't think a pension fund is particularly interested in volatility. What they probably want is participate from Bitcoin's growth, not profiting from leveraged trading.

You could argue Bitcoin's quite steep growth rate over the years is also a form of volatility. But it's not the growth over the years which is still holding it back imo, but the price swings caused by FOMO, fear and panic. The risk to buy in just in a FOMO move to then lose to a panic-caused downside move (if you can't just hodl for some years) is real.

I unfortunately don't know which "buyer type" for Bitcoin ETFs is currently more prevalent. What we see however is that volatility is very slowly lowering, and thus the attractiveness for Bitcoin "because of its volatility" is decreasing. Retailers talk all the time about DCA and hodling, and that's a good thing and shows they're interested in longer term growth and not so much into speculative short-term gains. ETF buyers could also lean gradually to the "long term growth" oriented buyer type.

In general thus I'm quite optimistic that things could be changing in the direction of the OP. However I'm not sure about the timeframe this could take.

I agree that not all investors in spot BTC ETFs are equal in terms of their strategies, but if we look at the inflow/outflow statistics, we can clearly see that some of them still seek short-term profit, and the question is how many of them have long-term confidence in BTC.

If we go in the direction of thinking that such investors are not too technically savvy when it comes to some basic understanding of Bitcoin, then the question arises whether their attitude towards investing in BTC can even be compared with someone who knows much more about the same, not only consider the price as a decisive factor.

Only time will tell if the minds of today's investors in BTC through spot ETFs can be changed, but I am quite skeptical about that, given that these people are only interested in profit, and Bitcoin is currently the ideal asset for quick earnings - of course if you know when to buy, and when to sell.

[davis196]

Gold is and will always be accepted as a financial asset by ALL countries around the world.
Bitcoin is still not accepted by many countries around the world. Gold is accepted by almost all central banks around the world as a reserve asset. No central bank in the world would accept Bitcoin as a reserve asset. Those are the two main differences between BTC and Gold.
I don't know why do you think that Bitcoin has to reaffirm his dominance in the crypto world. No altcoin could dethrone BTC so far. Maybe some altcoin would dethrone Bitcoin after several years, but I'm skeptical. I don't mind the competition in the crypto industry, but there's no altcoin project that would come even close to Bitcoin in terms of popularity, security and acceptance.
The funny thing is that one kilogram of gold is worth 80,778 USD and one Bitcoin is worth 58K USD. Maybe we should start comparing the price of one kilogram of gold to the price of one Bitcoin.

[d5000]

I agree that not all investors in spot BTC ETFs are equal in terms of their strategies, but if we look at the inflow/outflow statistics, we can clearly see that some of them still seek short-term profit, and the question is how many of them have long-term confidence in BTC.

I'm not so sure about that the fact that some days we see "outflows" regularly is an indication of major short-term investment in ETFs. Remember that Grayscale's Bitcoin Trust, which became the GBTC ETF, exists already more than a decade (it was founded in 2013), and outflows coming from the "new ETFs" (non-GBTC) were relatively rare and small, so it's likely that by far the largest amount of "outflows" is caused by longer-term GBTC holders.

There are of course some short term ETF holders causing outflows from the "new" ETFs. But from what I'm seen until now, it looks like they are a relatively small minority. I agree however with you that ETF buyers may be far less "idealistic" than the average member of this forum for example and only interested in the profit expectations. So if most of them predict a bear market we could see stronger outflows, and general quite pro-cyclic (although sometimes contrarian in shorter timeframes, as seen by their "buy the dip" attitude).

Unfortunately I haven't found statistics about the "average holding time" of Bitcoin ETFs, which would be interesting, above all about the tendency.

No central bank in the world would accept Bitcoin as a reserve asset.

You forgot El Salvador Although I'm not sure which structure of the Salvadoran government holds the BTC (I think the Central Bank was involved and have actually read about that some years ago, but I forgot the links).

I don't know why do you think that Bitcoin has to reaffirm his dominance in the crypto world. No altcoin could dethrone BTC so far.

Ethereum's shills, and also some parts of the "crypto media" outlets (which often lean towards glorifying altcoins as they probably depend on advertising from ICO projects and similar businesses), were full of expectations to be able to "flip" Bitcoin when they got their US ETFs approved. And every now and then an altcoin pops up claiming it's better than Bitcoin.

Of course actually the opposite has happened, the Bitcoin dominance was increasing in the last months as written in the OP. I think also that particularly BTC and ETH cater to different markets. But they are still included in the same lists (Coinmarketcap et al.) and are often compared, albeit of course outside the crypto bubble ETH is much less known.

The point is that investors may doubt about Bitcoin's status as "digital gold" if they see a strong crypto competitor which even may offer more growth potential. It's something that has become unlikely but still can't be completely ruled out, so that "item" in the OP list is almost, but not 100% "solved" for me.

[tabas]

It's interesting how it would look by 2025. If it hits the pattern we're surely gets close to those numbers that we're projecting. And you've mentioned that one factor that also plays a part in these cycles and patterns that we're looking at, the inflation. As it gets higher year by year, somehow at some point it gives a positive impact for Bitcoin.

Very logical in your thinking. It is important to speculate and predict based on previous cycles and use it as a hint. But at some point, we should try to be realistic and remember that Bitcoin may not follow recent patterns this time around.

I agree that it may not follow the same pattern as it did in the past. But there's always the better pattern that it goes every cycle that it goes so hopefully, that it is going to be better than the past that we've got.

A lot of people believe that every 4 cycles Bitcoins beat the old ATH and climb to a new ATH. What if it is different these times? What if these cycles could be from 5 years and above? I strongly believe that inflation is a huge factor that will impact the price of Bitcoin and this is because of the purchasing power. If there is inflation, Bitcoin will increase as well.

While that really make sense and we don't know what's holding in the future. Based on the historical pattern that Bitcoin has got, it didn't fail to do the same thing in different manners based on the gains that it has got so, if by this cycle it breaks that pattern and we'd see something unusual that didn't went based on its past, maybe you're right and let's see if that's going to be the thing this time.

[Stablexcoin]

A lot of people believe that every 4 cycles Bitcoins beat the old ATH and climb to a new ATH. What if it is different these times? What if these cycles could be from 5 years and above? I strongly believe that inflation is a huge factor that will impact the price of Bitcoin and this is because of the purchasing power. If there is inflation, Bitcoin will increase as well.

While that really make sense and we don't know what's holding in the future. Based on the historical pattern that Bitcoin has got, it didn't fail to do the same thing in different manners based on the gains that it has got so, if by this cycle it breaks that pattern and we'd see something unusual that didn't went based on its past, maybe you're right and let's see if that's going to be the thing this time.

I want to be honest right now. The halving cycle has been one of the recurring events i know i have seen happen a lot. The bull cycle and the bear cycle are something that we can't know when they will happen. However, such is the case in the market since we saw a different price movement immediately after the halving when others were expecting the same event that had happened in the previous halving cycle. One thing is sure certain about Bitcoin but i don't see it as a cycle or recurring event the price of Bitcoin can never be the same in 2 to 4 years intervals. Its always better than it has always been. And it doesn't stop there.

[tabas]

While that really make sense and we don't know what's holding in the future. Based on the historical pattern that Bitcoin has got, it didn't fail to do the same thing in different manners based on the gains that it has got so, if by this cycle it breaks that pattern and we'd see something unusual that didn't went based on its past, maybe you're right and let's see if that's going to be the thing this time.

I want to be honest right now. The halving cycle has been one of the recurring events i know i have seen happen a lot. The bull cycle and the bear cycle are something that we can't know when they will happen.

We've got some clues when it will happen but we don't know how long and how high and low will it be. For example with the bull run, it happens every after halving. And as for the bear cycle, we just have one simple clue about it and that happens when bull run's done.

However, such is the case in the market since we saw a different price movement immediately after the halving when others were expecting the same event that had happened in the previous halving cycle. One thing is sure certain about Bitcoin but i don't see it as a cycle or recurring event the price of Bitcoin can never be the same in 2 to 4 years intervals. Its always better than it has always been. And it doesn't stop there.

I agree that it's always have been better and this time, the cycle of bull is different but still it can get into the pattern about going on with the halving. The good thing about here is that, we've seen how Bitcoin broke its former ATH and went extra thousand bucks before even the halving does. I think that alone is a good sign that we're on the right path and there's more for this bull run.

[Lucius]

I agree that not all investors in spot BTC ETFs are equal in terms of their strategies, but if we look at the inflow/outflow statistics, we can clearly see that some of them still seek short-term profit, and the question is how many of them have long-term confidence in BTC.

I'm not so sure about that the fact that some days we see "outflows" regularly is an indication of major short-term investment in ETFs. Remember that Grayscale's Bitcoin Trust, which became the GBTC ETF, exists already more than a decade (it was founded in 2013), and outflows coming from the "new ETFs" (non-GBTC) were relatively rare and small, so it's likely that by far the largest amount of "outflows" is caused by longer-term GBTC holders.

However, GBTC had about 620 000 BTC at the time the spot ETF was approved, according to today's data it has only about 277 000 BTC and I don't think it plays too much of a role in inflows/outflows. If we look at what has entered IBIT so far as the largest fund, then they practically bought almost everything that GBTC sold. The question remains how significant is the influence of spot ETFs on the price, and how much of their inflows/outflows are just the result of what is happening on other markets when it comes to BTC trading.

There are of course some short term ETF holders causing outflows from the "new" ETFs. But from what I'm seen until now, it looks like they are a relatively small minority. I agree however with you that ETF buyers may be far less "idealistic" than the average member of this forum for example and only interested in the profit expectations. So if most of them predict a bear market we could see stronger outflows, and general quite pro-cyclic (although sometimes contrarian in shorter timeframes, as seen by their "buy the dip" attitude).

Unfortunately I haven't found statistics about the "average holding time" of Bitcoin ETFs, which would be interesting, above all about the tendency.
~snip~

We can only speculate about who the investors who choose spot ETFs are and how they think, but even though they choose a "simpler" way to invest in BTC, I have no doubt that they will always behave like the majority of those who invest in BTC - which means that they will start sell as soon as they realize that the opportunity for profit has passed or is less likely. 

Maybe some of them are investors who otherwise invest through CEXs, but we all know that in some moments of general madness, these platforms collapse and stop trading, which can be very frustrating for clients - and from the perspective of ETFs, they keep BTC in custodial services that (supposedly) are stored in cold storage, and the buy/sell option is always one click away. For someone who doesn't know or doesn't care about "not your keys, not your coins", ETFs make a lot more sense than CEXs or non-custodial wallets.

[add1ct3dd]

Gold has another "disadvantage", which is called fake gold, and it is no secret that it exists on the market, although the amount is impossible to estimate - on the other hand, there is no fake BTC, unless you take into account the few BTC forks that they are still somehow holding on to life.

The fake gold part took my interest a lot, and I researched a bit and it's true that there are so many that we do not even know how much fake gold is out there, it could be a lot more than what we think but certainly in billions. That's a big shock, crypto could never have something like that, we know what bitcoin is and there can't be fake bitcoin. Scammers exists in both cases of course, people can steal your bitcoin by convincing you of something, they can scam you, but there is no fake bitcoin at least.

I still think bitcoin marketcap will be above gold easily, gold has been around for so long and this is the max attention it got, not a lot of people think the same way about bitcoin and I bet they will do better. We are going to see bitcoin have a great result eventually and keep on going higher and higher. This should be a fine period and I believe that we will do just fine, this is why I believe that we will do just fine with time as long as we deal with this.