Key Points
- Bitcoin and other cryptocurrencies still have a long way to go in this bull market, according to on-chain metrics.
- Bitcoin’s inflation rate is now lower than gold’s, making it a more reliable store of value.
Charles Edwards, founder of Capriole Investments, recently observed that numerous on-chain indicators imply that Bitcoin and other digital currencies have a lot more growth potential in the current bull market.
Bitcoin: A More Reliable Store of Value than Gold
Edwards noted in his latest newsletter that transaction fees from the recent Runes launch and other long-term metrics following the Bitcoin halving suggest higher baseline Bitcoin (BTC) prices. Bitcoin’s fourth halving led to a 50% reduction in the digital asset’s supply growth rate, surpassing gold in terms of inflation rate.
He stated that prolonged periods of continuous currency debasement and high inflation rates position Bitcoin as a leading global fungible asset for long-term wealth preservation. Bitcoin’s inflation rate is now less than one quarter of gold’s, making Bitcoin the hardest store of value.
Bitcoin vs. Gold: A Comparison
Market intelligence firm Glassnode also concluded that Bitcoin has decisively surpassed gold in terms of issuance scarcity due to the halving. Furthermore, Arthur Hayes, an American entrepreneur and former CEO of cryptocurrency exchange BitMEX, stated that Bitcoin is the “hardest money ever created” as world governments will continue to print money to offset their debts, resulting in their currencies losing out against Bitcoin.
Edwards suggested that three things are likely to happen to BTC post-halving. The first is a significant increase in BTC price. The second is that approximately 15% of Bitcoin miners will cease operations. The third is that transaction fees will remain much higher than average.
However, Glassnode advised its readers to manage their expectations based on historical precedents, arguing that Bitcoin’s performance across various halving epochs is too diverse to be used as a guide today. They also noted that the current market dynamics and landscape are significantly different compared to previous halving events.
While Glassnode did not dismiss the possibility of an exponential growth in BTC price, they suggested that the future might not unfold exactly as it had in the past. Hayes, on the other hand, said that BTC’s path from the current levels to $1 million may not be as difficult as its history of rising from zero, buoyed by the bursting of the sovereign debt bubble.