Analyst predicts upcoming Bitcoin rally as BTC lags gold price performance

Ali Martinez’s analysis reveals striking similarities between the price movements of Bitcoin and gold and underscores Bitcoin’s role as “digital gold.”

Ali Martinez has highlighted a striking similarity between the price movements of Bitcoin and gold. This comparison underlines Bitcoin’s role as “digital gold”. The analysis examines two charts, one for CFDs on gold (US$/OZ) from 2011 to 2024 and another for Bitcoin (BTC/USD) from early 2022 to mid-2024. The visual comparison shows how Bitcoin’s price performance resembles that of gold, thereby supporting the portrayal of Bitcoin as a digital counterpart to gold.

If #Bitcoin is not digital gold, but the price development certainly looks like it! pic.twitter.com/ocxe8UkQPR

— Ali (@ali_charts) July 15, 2024

In the long term, Bitcoin is optimistic

The gold chart shows a long-term uptrend punctuated by consolidation and breakout phases. From 2011 to 2015, gold experienced a significant peak followed by a bearish trend. Between 2016 and 2019, gold prices consolidated within a range and fluctuated without a clear direction. After 2020, gold prices rose sharply after breaking out of the consolidation range around 2019. Another consolidation phase occurred from 2021 to early 2023, with gold recently breaking out again, suggesting a possible continuation of the uptrend.

The Bitcoin chart shows a clear uptrend from early 2023, mirroring the historical price behavior of gold. In early 2022, there was a clear downtrend that led to lower prices. From mid-2022 to early 2023 Bitcoin formed a bottom and started a gradual rise. Since the beginning of 2023, Bitcoin has shown strong upward momentum and established a new consolidation area. This price movement mirrors gold’s consolidation phase and indicates a possible breakout to higher levels.

Comparative insights

Both gold and Bitcoin exhibit a pattern of strong bullish momentum followed by periods of consolidation. This similarity reinforces the narrative of Bitcoin as “digital gold.” Given gold’s recent breakout, Bitcoin could follow a similar trajectory, resulting in a significant price increase if it breaks out of its current consolidation range.

Bitcoin’s properties as a store of value contribute to this comparison. In particular, Bitcoin’s durability, portability, fungibility, divisibility, scarcity, verifiability, and censorship resistance are important features that put it on par with gold as a store of value.

Bitcoin as a store of value

Bitcoin’s decentralization ensures its longevity as it is not subject to physical wear and tear. Its portability surpasses that of gold, allowing for fast and inexpensive global transactions. Bitcoin’s fungibility and divisibility enhance its usability, with each bitcoin being interchangeable and divisible into 100 million satoshis.

The limited supply of 21 million Bitcoins ensures their scarcity. Transactions are verifiable on a transparent blockchain and their decentralized nature offers resistance to censorship.

Bitcoin as a hedge against inflation

When comparing Bitcoin and Gold As an inflation hedge, several factors come into play. Gold has a long history as a reliable store of value in times of inflation. Its continued presence as an inflation hedge spans thousands of years. In contrast, Bitcoin, which has only been around for a little over a decade, is still proving its viability in this role.

Experts stress that while there is no historical data on Bitcoin as an inflation hedge, as it has only entered the market relatively recently, its properties suggest potential. Bitcoin’s limited supply inevitably leads to scarcity, a crucial factor for an inflation hedge. Bitcoin’s decentralized nature, which is resistant to central bank policy and government intervention, adds to its appeal as an inflation-resistant asset.

Bitcoin’s impressive ROI increase in 2023

The ROI of Bitcoin shows a dramatic upward trend, especially from mid-2023, and finally exceeds the 200% mark in March 2024. This significant increase highlights Bitcoin’s potential for significant gains.

In contrast, gold’s ROI shows a more stable and modest increase, mostly staying below 50%. While gold offers consistent but lower returns, reflecting its status as a traditional safe haven, Bitcoin’s higher volatility and rapid ROI growth make it a more speculative but potentially lucrative investment.