One indicator, according to well-known crypto analyst Benjamin Cowen, demonstrates how robust Bitcoin’s (BTC) performance has been over the last decade when compared to other key markets like as gold and equities.
Cowen tells his 711,000 YouTube viewers in a new video that gold is trading much lower than it was ten years ago when the M2 money supply is taken into account.
M2 is a measure of the current money supply that takes cash, checking accounts, and other easily convertible assets into account.
“When the money supply is taken into account, gold is nothing near where it was in 2011.” The bull run that gold has been on since 2011 appears to be at the same price, but when the money supply is taken into account, it would need to increase by 137 percent to reach the same price.
When you divide Bitcoin by M2, you get a whole different graph. One that seems to get better over time… When you account for the money supply, gold’s valuation looks dismal, I mean utterly abysmal.”
He claims that the similar tendency may be seen in other financial markets, such as the SPDR S&P 500 ETF (SPY).
“That’s how a lot of charts look.” What do you get when you divide SPY by the money supply, for example? You end up with something that doesn’t appear all that dissimilar.
When you split Bitcoin by the money supply, you get an entirely different picture. It usually gets better over time. Furthermore, when the money supply is taken into consideration, we can see that Bitcoin has already tested its 2017 all-time high in the summer, and it was on the verge of testing it again just a few weeks ago.”
According to Cowen, gold does not inherently qualify as an inflation hedge in the same way that Bitcoin does, based on M2.
“If you enjoy gold and have it in your portfolio, I honestly believe it will rise over time, but it does not mean it will exceed inflation.” It doesn’t mean it’s outperforming a lot of other assets, and you’ll probably have a lot more grey hairs by the time it reaches the valuations you’re after…
While gold has moved today, by a little less than 2%, what has it accomplished in the larger scheme of things? What has it accomplished besides bleeding against Bitcoin and failing to keep up with inflation… It doesn’t appear to have been done very well.”
Disclaimer: These are the writer’s opinions and should not be considered investment advice. Readers should do their own research.
