All Stars Aligned: Bitcoin, Gold, Fiat, and Debt

This post explores the idea that Bitcoin, often referred to as "digital gold," might one day replace gold as the preferred store of value.

Gold’s price (shown in yellow) has traditionally been sensitive to inflation, which is influenced by money printing, as indicated by the US M2 money supply (shown in white on the chart). Geopolitical and economic insecurity also drives demand for gold, the "safe-haven" metal. To add further context, I've also included US debt (shown in red).

The chart reveals that the market seems to have found some form of equilibrium at current levels, with gold’s price finally tracking the M2 money supply and debt parameters closely. Interestingly, Bitcoin (shown in orange) has mirrored this behavior in a similar fast-paced manner.

Around the $3,000 mark for gold and near $100,000 for Bitcoin, both assets are aligning with the money supply and debt trends. This suggests that any further price increases could be limited unless additional money is printed or debt increases. Of course, a Black Swan event could disrupt this equilibrium at any time.

I also used TradingView’s Correlation Coefficient tool to examine the relationship between Bitcoin and gold. The correlation is impressively high at 0.87, indicating an almost perfect alignment between the two assets.

The chart supports the idea that Bitcoin is tracking gold closely, strengthening the notion that Bitcoin could indeed be positioning itself as the "digital gold" of the future.

Let me know your thoughts in the comments below!