Matt Hogan, head of research at Bitwise, noted that Bitcoin is now repeating the dynamics of gold in the 1970s, when the price of precious metal rose by 1 365% over 10 years.
“In 1971, America abandoned the gold standard. People did not understand what would happen to gold next. Will it be a safe asset, untied from the dollar? Or will it become a “barbaric relic”, as John Maynard Keynes once called it? As a result, we observed strong volatility while the two sides fought each other, ”says Hogan in an article for Forbes.
In his opinion, the high volatility of bitcoin is an integral part of it, while the cryptocurrency is trying to gain confidence and prove that it can be a tool for the accumulation of capital.
“This is where the risk lies. Gold could be thrown into the history bin, like kauri shells and other earlier means of accumulation, and this is what led to volatility and, as a result, high returns. The more confidence was strengthened that gold would play the role of an instrument for capital accumulation, the more its price grew, and investors allocated more and more space for this asset in their investment portfolios.
A similar process is happening with Bitcoin, ”says Hogan. – There is a possibility that such a time will come when Bitcoin will become absolutely uninteresting. But if we get to this point, its price will be much higher than today. ”
In the article, he writes that the average annual yield of gold in dollars since 1980 is 2.3%. If inflation is taken into account, then this is at all 0.7%. Of course, there was a good period in the 2000s, but in most of this period, the precious metal simply kept its value, which it should do. Apparently, Bitcoin will show similar dynamics in the future, if it nevertheless becomes an instrument of capital accumulation for the whole world.
Blockchain Capital’s general partner Spencer Bogart is of a different opinion. He previously stated that bitcoin may not meet the expectations of optimistic investors during the financial crisis.