- Gold has significantly outperformed Bitcoin in 2023, rallying 23% while Bitcoin declined 12%.
- Gold’s market size ($21+ trillion) is vastly larger than Bitcoin’s ($1.6 trillion), making its price movement more difficult to influence.
- Moving gold’s price by 5% would require approximately 200 basis points of the world’s estimated $432 trillion in private wealth.
Gold significantly outperformed its digital rival Bitcoin in 2023, with the precious metal rallying 23% since January 1, while Bitcoin (BTC) declined by 12%. This performance gap represents one of the most embarrassing charts for the cryptocurrency industry this year, highlighting the divergence between the traditional safe-haven asset and its digital counterpart.
The contrast becomes even more remarkable when considering the vast difference in market sizes. Gold’s global market value stands at a conservative estimate of $21 trillion, dwarfing Bitcoin’s relatively modest $1.6 trillion. This size disparity means gold’s price movement requires substantially more capital inflow or outflow to achieve similar percentage changes.
The Gold Ownership Landscape
Estimates of global gold holdings vary widely. Some researchers suggest that China might secretly own as much as 40,000 tonnes of gold—five times the amount held by the United States—while Russia potentially holds more than 11,000 tonnes. Various analysts propose total gold valuations ranging from $21 trillion to upwards of $100 trillion, reflecting the centuries-long human tendency to accumulate and hide gold.
Regardless of the exact figure, moving gold’s price requires significantly more wealth than shifting Bitcoin’s value. According to Credit Suisse estimates, global private wealth totaled approximately $454 trillion at the end of 2022 and currently stands at least $432 trillion.
Market Impact Considerations
Using even the conservative $21 trillion valuation for gold, a 5% price movement would require a withdrawal or addition of roughly 200 basis points of the world’s total private wealth. This considerable capital requirement underscores the stability and established nature of gold as an asset class compared to the relatively volatile cryptocurrency market.
The performance gap challenges the narrative often promoted by Bitcoin advocates who position the cryptocurrency as “digital gold” and a superior store of value. As both assets continue to be evaluated in uncertain economic conditions, this year’s performance suggests traditional gold still maintains its historical investment appeal despite technological alternatives.
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