During the 1976 IMF Crisis also known as the Sterling Crisis, the British Government had to borrow the largest ever loan of $3.9 billion from the IMF. During that year, Gold Futures began to rally and the climb continued all the way till 1979. We have only seen one similar rally in Gold Futures and that was the one beginning in 2001 after the dot com bubble. Gold kept on climbing throughout the financial crisis of 2008-09 and finally topped out in 2011. Since then, Gold has been in a downtrend but things are about to change. After Gold’s previous downtrend, it traded sideways for 15 years, but this time we do not have 15 years. The next global financial crisis is going to strike this year or the next few years and investors are already making preparations.
Bitcoin (BTC), just like Gold was meant to serve as a hedge during periods of financial turmoil. After the crisis of 2008-09, Satoshi Nakamoto published his whitepaper on Bitcoin (BTC) and the early developers and miners took it from there. We have not seen any financial crisis since then to say for sure that Bitcoin (BTC) will behave like Gold during a financial crisis. However, we have seen Bitcoin (BTC) following Gold’s moves in the past. Interestingly enough, Bitcoin (BTC) has now fully caught up with Gold. Bitcoin (BTC) has followed Gold on a much smaller time frame which and has still caught up with it. In fact, it wouldn’t be wrong to say that Bitcoin (BTC) is like Gold on steroids.
This is the weekly chart for BTC/USD which highlights similar fractals printed by Gold as shown on the monthly chart for Gold Futures. If we compare the two charts, we can see that Bitcoin (BTC) has completed the same pattern in years that Gold has completed in decades. Both of these charts show a rally and a correction followed by period of sideways movement which is again followed by a rally and correction. In fact, both the charts show two periods of rallies, two periods of corrections and one period of sideways movement. At this point, Bitcoin (BTC) has finally caught up with Gold and is expected to take its direction during the months and years ahead.
The large majority of investors in Gold are people from older generations. Today’s digital society that lives through the internet has a far different view of what serves as money or store of value. Gold cannot be used to buy items on Etsy or a piece of land on Decentraland. Bitcoin (BTC) on the other hand can be used for all of that in addition to being an effective store of value. We do not know how much Gold is yet to be mined but we know for sure how many Bitcoin (BTC) are mined and how many remains to be mined. Storing and transferring Bitcoin (BTC) is also a lot easier than Gold especially for millennials. We do not know yet if Bitcoin (BTC) will outperform Gold during the upcoming crisis but the fact that Bitcoin (BTC) followed and completed decades of Gold’s market cycles in just ten years of trading history is a strong hint that it might.
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