Bitcoin News
Why am I comparing Bitcoin to gold?There are many reasons to compare Bitcoin to gold, the main five of which are:Total supply: Gold is inherently finite, while Bitcoin will never be produced more than 21 million.
Store of Value: Gold has been used as a store of value for many years, and Bitcoin is doing the same in the digital age.
Inflation hedge: Gold has always been effective against inflation for a long time, but in the current era, Bitcoin is very effective against inflation.
Counterparty Risk: If you own the gold, you don't need a bank. In the case of Bitcoin, having the keys in self-custody means it is your own asset.
Decentralization: Just as gold is not controlled by anyone, Bitcoin is not controlled by any single person or group.
All these similarities between Bitcoin and gold are why I compared Bitcoin to gold.
Why do I say Bitcoin is still cheap compared to the price of gold? Bitcoin News noted in a Twitter post that, according to the Gold-Inferred Power Law Model, if gold's centuries-old price trend is applied to Bitcoin, the current fair value of BTC should be around $169,000. That's almost double Bitcoin's current price. That means BTC is still significantly undervalued.
According to the Power Law, the value of anything does not increase in a straight line over time, and the value of Bitcoin does not increase in a straight line over time. It increases when interest rates are low, the economy is stable, and people are attracted to risky investments, as happened with gold in the past.
In that context, comparing the current price of Bitcoin with gold versus the fair value according to the model, it can be seen that Bitcoin is still about 50% below its potential value.
Since Bitcoin is considered as the gold alternative of the digital age, if Bitcoin becomes a global store of value equivalent to Gold in the future, then the value of Bitcoin should more than double from its current value.
And if the above points are true, then I can firmly say that Bitcoin is still cheap because it will still increase its value by more than doubling.
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