Bitcoin Breaks Through $100,000—Has It Finally Undermined Gold?
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Bitcoin Breaks Through $100,000—Has It Finally Undermined Gold?
Is Bitcoin shaking gold's position?
Navigating Web3 tides with focused insightsBy Mu Mu
Recently, as Bitcoin approached the $100,000 psychological threshold with volatility, it finally broke through this key level today. In fact, Bitcoin's recent explosive rally has already overshadowed even gold, which has also seen significant gains. Perhaps the moment some countries—including the United States—began successively proposing to adopt Bitcoin as a strategic reserve, Bitcoin started chipping away at gold’s long-standing dominance:
10 years ago (December 2014): Gold was priced at 250 RMB/gram; 10 years later: 630 RMB/gram — a 2.5x increase over a decade
10 years ago (December 2014): Bitcoin was $360 per coin; 10 years later: $100,000 per coin — a 277x increase over a decade
Just a few years ago, when someone first mentioned the concept of "digital gold," anyone discussing it would almost certainly be eyed as if they were a scammer. Yet in just ten years, Bitcoin has grown at an astonishing pace, to the point where it is now beginning to challenge gold’s millennia-old, seemingly unshakable status...
Gold vs. Digital Gold: Bitcoin
Bitcoin is called “digital gold” because it shares certain characteristics with gold. However, many people still struggle to connect physical assets with digital ones. Perhaps this story begins with the background of Bitcoin’s creation…
1) The Background of Bitcoin’s Creation
Thousands of years ago (exact dates uncertain), gold had already become “hard currency.” Records show it functioned as money as early as the Spring and Autumn and Warring States periods over two thousand years ago—and its use has continued ever since. Holding and using gold requires no permission from any individual, institution, or even nation-state, truly embodying the principle of “private property being inviolable.”
Historically, in 1717, Isaac Newton of England first proposed the gold standard—the monetary system in which gold serves as the base currency unit, with national money supply and exchange value determined by gold reserves. Over time, most countries gradually adopted this model. It wasn’t until 1971 that U.S. Secretary of State Henry Kissinger announced plans to abandon the gold standard, severing the direct link between the U.S. dollar and gold, followed by other nations. This meant that modern fiat currencies were no longer constrained by gold reserves—allowing for discretionary control over inflation and devaluation.
Later, during the 2008 global financial crisis, the U.S. printed vast amounts of money to bail out banks. People realized their savings were being diluted involuntarily, sparking widespread public anger and deep distrust in the financial system—providing crucial context for Satoshi Nakamoto’s motivation behind creating Bitcoin.
This explains why Satoshi embedded this message in Bitcoin’s genesis block: “The Times 03/Jan/2009 Chancellor on brink of second bailout for banks”—the headline of The Times newspaper on the day Bitcoin was launched.
Satoshi Nakamoto left behind enough traces before mysteriously disappearing, leading many to believe Bitcoin was a direct response to the 2007–2008 financial crisis. On February 2009, Satoshi posted an article introducing Bitcoin on the P2P Foundation message board.
In it, he expressed skepticism toward central banks and concern about asset security: “We have to trust banks to hold our money and transfer it electronically, but they lend it out in waves of credit bubbles with little reserve. We must trust them with our privacy, hoping identity thieves won’t drain our accounts. Their heavy fees make micropayments impossible.”
2) What Specific Similarities Exist Between Gold and Bitcoin?
A. Decentralization
Gold: A natural resource distributed across Earth—anyone might discover gold somewhere
Bitcoin: A public blockchain with nodes spread globally, open for anyone to participate in mining
B. Mining
Gold: Requires miners, mines, equipment, and electricity
Bitcoin: Also requires block producers (miners), mining farms, hardware, and power
C. Scarcity
Gold: A non-renewable natural resource
Bitcoin: Capped at 21 million coins
D. Durability
Gold: Chemically stable, never rusts
Bitcoin: Secure and robust network, on-chain data immutable and permanent
E. Counterfeit Resistance
Gold: “Real gold fears no fire”
Bitcoin: Impossible to alter despite massive investment
That said, while they are remarkably similar in some aspects, digital gold offers several advantages that physical gold simply cannot match, such as:
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Bitcoin is extremely portable—just memorize a recovery phrase; physical gold is heavy and cumbersome;
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Bitcoin can be verified for authenticity anytime, anywhere; physical gold can be counterfeited using metals with similar density (in recent years, numerous cases of adulterated gold jewelry have occurred);
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Bitcoin is easily divisible for transactions; gold is not;
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Bitcoin can transfer hundreds of millions of dollars on-chain with only tens of dollars in fees—something neither gold nor the modern banking system can achieve in terms of cost-efficiency and speed.
Bitcoin Is Chipping Away at Gold’s Dominance
1) Grayscale Repeatedly Runs Ads Suggesting Bitcoin Replace Gold
Grayscale launched its first “Drop Gold” campaign on May 1, 2019, running advertisements urging people to consider replacing gold with Bitcoin.
In 2020, Barry Silbert, founder of Grayscale and blockchain venture firm DCG, tweeted that Grayscale had relaunched the anti-gold “Drop Gold” ad campaign, now airing across all major U.S. networks. This marketing push for Bitcoin claims “digital currencies like Bitcoin represent the future,” aiming to position Bitcoin as the store of value for the 21st century.
In truth, most people—including many financial institutions—dismissed Grayscale’s ads years ago. Prominent financiers openly mocked them; for instance, BlackRock CEO Larry Fink once bluntly declared Bitcoin “worthless!” Yet recently, Fink changed his stance, stating: BTC will disrupt traditional finance.
Today, BlackRock has become a major Bitcoin whale, holding nearly 500,000 BTC.
2) Rapid Inflows into Spot ETFs
As early as 2020, JPMorgan Chase—the largest bank in the U.S. by balance sheet—published a report analyzing the success of Grayscale’s Bitcoin Trust (GBTC). Once one of Bitcoin’s harshest critics, the bank acknowledged in the report that demand for Bitcoin could impact mature markets.
JPMorgan pointed out that rising Bitcoin demand may erode demand for gold ETFs. According to the study, inflows into Grayscale’s Bitcoin Trust significantly exceeded those into gold ETFs by October 2023. The U.S. bank concluded that GBTC might capture a portion of the gold ETF market share.
coinglass: Total market cap of BTC ETFs has surpassed $110 billion
Unsurprisingly, after the launch of Bitcoin spot ETFs, massive capital flowed in, while gold ETFs experienced large outflows. Numerous financial commentators have noted this is no coincidence—Bitcoin spot ETFs are absorbing huge sums, much of which appears to be coming directly from gold ETFs. Recently, media reported that BlackRock’s IBIT fund has surpassed the largest silver ETF in AUM. BlackRock now holds over 500,000 BTC, far exceeding the size of the largest silver ETF.
3) Bitcoin Ranks Among Top 10 Global Assets by Market Cap
As of December 5, according to the Companiesmarketcap global asset ranking, Bitcoin, with a $2 trillion market cap, has overtaken silver to rank 7th among global assets. Bitcoin’s market cap has also surpassed the combined market value of the world’s top four banks.
Top 10 Global Assets by Market Cap, Source: Companiesmarketcap
Bitcoin still trails gold, whose market cap exceeds $15 trillion, by more than seven times. But to many in the crypto space, achieving this for an asset that grew 277x in ten years may not seem so difficult.
Recently, Anthony Scaramucci, CEO of SkyBridge Capital and veteran hedge fund manager, stated that Bitcoin’s market cap will eventually surpass gold’s $16 trillion valuation. In a CNBC interview, the SkyBridge Capital founder called Bitcoin “an exceptional asset unlike anything humanity has seen in the past 5,000 years.”
Scaramucci admitted Bitcoin still has a long way to go to match gold’s $16 trillion market cap, but believes the gap will narrow over time, especially as regulators approve BTC ETFs.
4) Bitcoin Is Emerging as a “Safe-Haven” Asset
For most people, gold functions primarily as a hedge against inflation—making it a form of safe-haven asset. Yet in reality, gold often fails to outpace inflation. Bitcoin, however, with its consistent new highs, fixed supply cap, and halving cycle every four years, has never disappointed in this regard.
Due to broad consensus, gold exhibits very low volatility, whereas Bitcoin is the opposite—offering higher growth potential but also greater risk. Nevertheless, Bitcoin’s volatility is gradually decreasing, and it is genuinely becoming a viable “safe-haven tool” for high-inflation countries…
Recently, a new International Monetary Fund (IMF) report titled *A Primer on Bitcoin Cross-Border Flows* noted that BTC has become an essential financial tool for preserving wealth amid financial instability. The analysis also found that on-chain Bitcoin transactions—recorded on the blockchain and offering higher security—are typically larger than off-chain transactions, suggesting blockchain’s strong security features often protect substantial financial interests.
The report’s authors stated that Bitcoin transactions offer individuals in high-inflation countries a way to save stably and engage in global commerce in ways local currencies cannot provide.
From another perspective, when missing out (“FOMO”) is itself seen as a “risk,” many investors are adding Bitcoin—the “alternative asset”—to their portfolios precisely to hedge against the risk of failing to participate in future Web3 technologies and missing the crypto revolution.
When the crypto market declines, some investors choose to swap high-risk altcoins for more stable, lower-risk Bitcoin—cutting losses without fully exiting the market or risking missing the next upswing. Thus, Bitcoin is often used to hedge against the high risks posed by altcoin holdings.
Summary
In fact, it’s not surprising that Bitcoin is gradually eroding gold’s market share. The relationship between “digital gold” and “gold” is akin to that between “digital payments” and “paper cash.” As time progresses, the use of paper money continues to decline. Similarly, ancient gold may no longer meet everyone’s needs—enter Bitcoin, filling the void. Whether Bitcoin will eventually surpass gold remains to be seen—only time will tell.
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