Bitcoin is now preparing to leave gold and the NASDAQ far behind as history has shown the cryptocurrency outperform during monetary expansion.
Gold is currently up more than 30% this year-to-date, while the NASDAQ has risen only 24.43%, respectively.
Bitcoin (BTC) is currently leading the way with gains of more than 52% this year-to-date.
Insights from Ecoinometrics, a crypto data provider, have underscored Bitcoin’s capacity to thrive during times of monetary expansion.
As major economies face potential fiscal difficulties, attention shifts back to Bitcoin’s reactions when fiat currencies are devalued.
A key example of this occurred in 2020 when governments in the U.S. and around the world injected significant liquidity into their economies in response to the COVID-19 pandemic.
During this period, Bitcoin notably outperformed traditional assets, showcasing its potential as a hedge against inflation and currency devaluation.
Following the pandemic, central banks globally undertook extensive monetary expansion. In the U.S., for instance, the M2 money supply surged by an astonishing $6 trillion to address the economic fallout from COVID-19.
Ecoinometrics’ analysis reveals that Bitcoin, unlike conventional assets, reaped substantial benefits from this influx of liquidity.
During this time, the cryptocurrency achieved an impressive compound annual growth rate (CAGR) of about 150%.
This growth significantly outpaced the NASDAQ, which saw a CAGR of less than 50%, and gold, which lagged far behind.
Bitcoin’s CAGR was nearly four times higher than that of the NASDAQ and approximately 20 times greater than gold.
Currently, the economic environment is different from the aggressive monetary expansion of 2020, with governments not printing money at the same rate as during the pandemic.
Consequently, Bitcoin’s price has stabilized in recent months.
Ecoinometrics notes that, in the absence of strong monetary growth, Bitcoin tends to maintain stability, as its most significant gains often coincide with periods of fiat debasement.
Despite the current calm, global fiscal challenges, such as rising deficits and increasing debt levels, suggest that another wave of liquidity injections might be forthcoming.
If this happens, Bitcoin could experience another substantial price increase, likely outperforming traditional stocks and other asset classes.
Additionally, the upcoming U.S. presidential election may further influence Bitcoin’s trajectory. Research from Bernstein indicates that if Donald Trump wins, Bitcoin could surpass its all-time high of $73,949.
Analysts believe that Trump’s positive attitude towards digital assets could drive further adoption and growth of Bitcoin.
Standard Chartered has also projected that Bitcoin could reach $150,000 if Trump wins the election, with predictions of hitting $200,000 by 2025, regardless of the election outcome.
But I’m curious to know what you think — leave your thoughts below.
Also Read: Bitcoin ETF Volume Now Surges Past A Whopping $2.1 Billion
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