Bitcoin is increasingly outperforming gold and has become the preferred strategic reserve. The digital asset’s value relative to gold has grown significantly, breaking through the highest value ever as institutions show increasing interest in BTC ETFs.
Although gold is widely considered a strategic reserve asset, Bitcoin is rapidly gaining momentum. Bitcoin’s value relative to gold has soared to its highest value, signifying a potential shift in strategic reserve preference.
Bitcoin-to-gold ratio surges to a historic 37.3
Just in: Bitcoin-Gold Ratio Hits New All-Time High! On Dec. 16, 1 $BTC equaled 40 ounces of gold as Bitcoin soared past $106K, with gold trading at ~$2,650. A milestone showcasing Bitcoin’s growing dominance as a store of value. 🚀 #Bitcoin #Gold #Crypto pic.twitter.com/5kV2495JJh
— Andres Meneses (@andreswifitv) December 16, 2024
The BTC-to-gold ratio, which measures how many ounces of gold one Bitcoin can buy, broke through the highest levels. The ratio is calculated by dividing Bitcoin’s price by gold’s spot price per ounce. The value is then used to compare the relative strength between Bitcoin and gold. On Monday, the ratio sat at a record-breaking 37.3 as Bitcoin broke through the $106k.
The ratio signifies that one Bitcoin can purchase about 37 ounces of gold. The current Bitcoin-to-gold ratio has surpassed that witnessed in the previous bull cycle, which peaked at 36.7 in November 2021.
Sidney Powell, CEO and co-founder of institutional capital marketplace Maple Finance, said Bitcoin’s rally shows the cryptocurrency’s adoption and maturity as an asset class. The executive told Decrypt that he expects the ratio to “catch up” as spot BTC ETF inflows continue to propel Bitcoin’s price. Powell also noted that Bitcoin is increasingly being considered a staple part of balanced portfolios.
Singapore-based digital asset trading firm QCP Capital wrote on Monday that the Bitcoin-to-gold ratio aligns with Bitcoin being considered digital gold. The asset trading firm also noted that Bitcoin has retained its position as the best preference for storage of value over traditional gold.
“The BTC/Gold ratio reached an all-time high during the move, amplifying Bitcoin’s status as “digital gold” and cementing its position as an increasingly favored store of value over traditional gold.”
The note also highlighted that MicroStrategy’s inclusion in the Nasdaq 100 reinforced the prevailing market sentiment. Michael Saylor, MicroStrategy’s chair, hinted that the company would purchase more Bitcoin despite the asset pricing above $100k.
MicroStrategy adopted Bitcoin as a strategic reserve in 2020 and has become the largest corporate Bitcoin holder. According to data from Bitcoin Treasuries, MicroStrategy has doubled down on the asset since then and now holds $46.87 billion in Bitcoin.
Governments hint at adopting BTC as a reserve asset
Michael Saylor’s company has inspired other companies to adopt BTC as a strategic reserve. Nasdaq-listed Solidion recently pledged to allocate 60% of its cash reserves to purchase Bitcoin. Metaplanet also mirrored Michael Saylor’s approach and adopted the asset as a strategic reserve.
As more corporations join the bandwagon, governments worldwide consider Bitcoin a strategic national reserve asset. President-elect Donald Trump promised to establish a national Bitcoin reserve asset, which has sparked discussions in other countries such as Russia, Brazil, Poland, and Japan.
In an interview with Yahoo Finance, Michael Saylor advised the incoming administration to sell the country’s gold reserves and adopt Bitcoin instead. Saylor also discouraged the U.S. government from buying more gold for its national reserve.
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