Bitcoin’s Path To The Top: Fidelity Believes The World’s Largest Crypto Could Potentially Dethrone Gold

Over the last 16 years, Bitcoin has become a formidable challenger to traditional assets like gold. While gold has long served humanity as a reliable store of value and a hedge against economic uncertainty, Bitcoin’s rise as a modern-day store of value has triggered debates about Bitcoin potentially overtaking the lustrous metal.

With Bitcoin’s market cap currently standing at $1.6 trillion, representing a tiny fraction of gold’s $20.7 trillion market cap, the question arises: Can Bitcoin surpass gold in market cap due to its impressive growth pace?

Why Bitcoin Surpassing Gold Is Very Possible

Jurrien Timmer, director of global macro at Fidelity Investments, has shared his belief that Bitcoin, the world’s oldest and largest digital asset, will eventually overtake gold’s total market capitalization.

While Timmer stressed that Bitcoin could achieve the huge feat, he acknowledged that the flipping would not happen anytime soon.

The Fidelity exec noted that the price of gold has appreciated at a compound annual growth rate (CAGR) of 8% since the 1970s. According to his analysis, if gold continues growing at the same rate and Bitcoin follows either the S-curve trajectory of internet adoption or the power law curve, the apex crypto could usurp the yellow metal a decade or two from now.

Timmer further suggests that gold could potentially transcend its historical CAGR of 8% if BTC grows at the rate proposed by either of the two aforementioned models. In this case, gold will still be ahead of Bitcoin. “So, my guess is that gold will always be Bitcoin’s quieter older sibling,” he explained. 

Bitcoin Adoption Among Nation-States

Meanwhile, developments signal a growing trend among nations considering Bitcoin as part of their strategic financial strategy.

El Salvador’s audacious decision in 2021 to make Bitcoin legal tender and create a national reserve of the cryptocurrency sparked a debate worldwide on the future of reserve assets. As of March 29, El Salvador held 6.13K BTC, valued at around $512 million, despite recently signing an anti-BTC deal with the IMF. The Nayib Bukele-led country seeks to leverage Bitcoin’s potential to bolster its economy.

In the U.S., President Donald Trump signed an executive order earlier this month to create a “Strategic Bitcoin Reserve” and a “Digital Asset Stockpile.”

The reserve and stockpile will initially use cryptocurrency seized in government criminal and civil cases, but the reserve won’t sell the stashed BTC and will use “budget-neutral” ways to boost its size, while tokens from the stockpile could be sold.

US Senator Cynthia Lummis’ newly reintroduced BITCOIN Act will allow the government to potentially hold over 1 million Bitcoin as part of its newly established reserve.

That said, the increasing institutional interest and growing adoption could play a key role in propelling its price higher. While its difficult to predict the exact price at which Bitcoin will dethrone gold, the journey towards that milestone promises to be a fascinating one, with enormous implications for the future of finance.