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- Gold has skyrocketed by 50% in the past year to reach a new ATH with institutional purchases serving as the main catalyst.
- Bitcoin could be next in line to experience such growth and surpass its current $2.48 trillion market cap, potentially reaching a value of $20 trillion.
Gold just hit a new all-time high, climbing above $3,940 per ounce on Monday, as investors flocked to safety amid renewed uncertainty in Washington. The latest U.S. government shutdown, triggered by Congress’s failure to agree on a funding bill, rattled markets and reignited concerns about broader economic stability.
Gold’s total market capitalization now stands around $26 trillion, and since the start of the year, prices have surged over 50%, the strongest annual rally since 1979. Much of this has been driven by institutional demand.
Central banks added 15 tonnes of gold to global reserves in August alone, according to the World Gold Council.
On top of that, asset managers have collectively funneled an estimated $10 trillion into gold-related products, from Exchange Traded Funds (ETFs) to direct holdings, enough to push prices to historic highs.
Now, imagine that same institutional wave turning toward a much smaller market. As investor and Bitcoin advocate Anthony Pompliano recently put it on X:
Central banks and institutions started buying gold this year, and they pushed a $20 trillion asset up nearly 50%. What do you think happens when they start buying a $2.5 trillion asset for the same sound money principles?
The Infrastructure Factor
If we applied the same proportional math, a $10 trillion influx into Bitcoin would expand its market capitalization from $2.5 trillion to $12.5 trillion, a staggering 5x increase, or roughly a 400% price gain. Even smaller institutional allocations could have an outsized impact.
For instance, just 1% of gold’s market, which is $200 billion, could potentially push Bitcoin up 8%, or 5% to $1 trillion. This might translate into a 40% increase, while 10% ($2 trillion) could drive prices nearly 80% higher.
These numbers highlight how even modest capital flows could change Bitcoin’s price trajectory, especially compared to gold’s far deeper and more liquid market. Of course, real-world dynamics are rarely that straightforward.
Bitcoin’s smaller liquidity pool means that large institutional orders could move the market quickly, creating short-term volatility. Yet, while gold’s supply is largely fixed and illiquid, Bitcoin’s programmed scarcity of 21 million, reinforced by its 4-year halving cycles, adds a level of supply constraint that even gold doesn’t possess.
Fortunately, Bitcoin’s ability to handle institutional-scale inflows has improved over the past year. The approval of spot Bitcoin ETFs across the U.S. in 2024 and other regions has made access easier for traditional funds. In fact, ETFs recently recorded their second-largest weekly inflows ever, totaling $3.3 billion, while combined inflows into BlackRock’s IBIT and ETHA have surpassed $10 billion in a single month, ranking third and fourth globally.
Bitcoin’s growing presence on company balance sheets would become one of the strongest catalysts driving it closer to gold’s market stature. Public and private companies collectively hold over 1.1 million BTC, representing roughly 5% of the total supply.
Among nations, the United States leads with the largest share of corporate-held Bitcoin. One standout is MicroStrategy, which owns an impressive 640,031 BTC, spearheaded by CEO Michael Saylor.
As highlighted in our previous article, Saylor argued that Bitcoin will outpace gold by a factor of ten, emphasizing that the digital asset transcends the physical limitations of the metal, it’s portable, divisible, and immune to degradation.
At the time of writing, Bitcoin trades at $124,700, up 11.23% in the past week after notching a new all-time high of $125,559.
