Investment guru Paul Tudor Jones points to long-term success of Bitcoin

The current price development seems to be similar to gold in the 1970s, which could soon mean a long-term upswing.

A two-year period of Bitcoin’s long-term performance indicates that the market-leading crypto currency is currently in the early stages of a multi-year uptrend that could give it exponential growth in the long term.
Gold and Bitcoin price sections in comparison by Paul Tudor Jones.

Bitcoin with similar development to gold

As can be seen from the graph above, the Bitcoin exchange rate over the last two years shows a roughly similar development to that of gold in the years 1975 – 1977. There are two good reasons why the crypto-currency could make similar upswing in the next few years as the precious Crypto Code metal did in the years that followed. Firstly, Bitcoin is limited to a fixed amount in circulation, which makes it an attractive hedge against inflation, and secondly, it has a similar function as a store of value to gold.

In August 2020, the Winklevoss twins, who are among Bitcoin’s largest investors and who themselves operate the large US crypto exchange Gemini, published a thesis paper explaining how and why Bitcoin could climb to $500,000 in the future.

In their paper, they identified several features that make the market-leading crypto currency a legitimate means of protection. In particular, the twins emphasise the fact that Bitcoin will never experience severe supply shocks, as is potentially possible with gold. To that effect they explain:

“Supply. Bitcoin is not only a scarce commercial product, but also the only one in the universe with a predetermined and fixed quantity in circulation or a fixed offer. As a result, Bitcoin will never experience supply shocks, as is the case with gold or other commodities whose supply could grow abruptly in the future”.

For this reason, it would be permissible to consider Bitcoin as a better hedge than gold. For many observers, the recurring comparison with gold alone is already a hint that the crypto currency will achieve exponential growth in the long term.

Su Zhu, the CEO of Three Arrows Capital, one of the largest investment funds in the crypto industry, also sees strong similarities in the price development of the two financial products and believes

“A further downturn in the Bitcoin price would be extremely positive as it would confirm that we are on the same path as the gold segment in the 1970s. As we can see in the graph above, provided by investment guru Paul Tudor Jones, who, by analysing price slices, had predicted the great upturn in stock markets in the 1980s”.

Furthermore, there is currently a massive difference between the market values of Bitcoin and gold. While the market capitalisation of gold is estimated at 9 trillion US dollar, the total value of Bitcoin is less than 4% of the market capitalisation of the precious metal. So the crypto currency still has a lot of room for improvement, even if it should never become as large as gold.