The current price development seems to be behaving similarly to gold in the 1970s, which could soon mean a long-term upswing.
A two-year segment of the long-term price development of Bitcoin indicates that the market-leading cryptocurrency is currently in the early stages of a multi-year upward trend that could bring its long-term exponential growth.
Bitcoin with a similar development to gold
As can be seen from the graphic above, the Bitcoin price has developed roughly similar to gold in the years 1975-1977 in the last two years. There are two good reasons why the cryptocurrency will have a comparable upturn as this in the next few years Precious metal in the following years. First, Bitcoin is limited to a fixed amount in circulation, which makes it an attractive hedge against inflation, and second, it has a similar function as a store of value to gold.
In August 2020, the Winklevoss twins, who are among the largest investors in Bitcoin and themselves run the large American crypto exchange Gemini, published a theses paper in which they explained how and why Bitcoin could climb to 500,000 US dollars in the future.
In their thesis paper, they name several properties that make the market-leading crypto currency a legitimate means of hedging
The twins particularly emphasize the fact that Bitcoin will never experience severe supply shocks, as is potentially possible with gold. To this end, they explain:
„Offer. Bitcoin is not only a scarce commercial product, but also the only one in the entire universe that has a predetermined and fixed amount in circulation or a fixed supply. As a result, there will never be supply shocks with Bitcoin, as is the case with gold or other commodities whose supply could grow suddenly in the future. „
Because of this, it would be permissible to think of Bitcoin as a better means of hedging than gold. For many observers, the recurring comparison with gold alone is a hint that the crypto currency will achieve exponential growth in the long term.