Based on the fractal, Bitcoin is in an early phase of a prolonged rally that could allow BTC to experience exponential growth in the longer term.
Bitcoin may be on the same trajectory as gold
There are two main reasons why Bitcoin could follow the macro trend gold saw from the 1970s. First, BTC has a fixed supply that cannot expand, which makes it an attractive hedge against inflation. Second, BTC has the same qualities of a safe-haven asset that gold has.
In August 2020, the Winklevoss twins, billionaire Bitcoin investors behind the major U.S. cryptocurrency exchange Gemini, laid out a bull case for why BTC price could rally to $500,000.
In the thesis, they identified the qualities of Bitcoin that make it a viable safe-haven asset. The Winklevoss specifically emphasized that BTC is not subject to any potential supply shocks, unlike gold. They wrote:
“Supply. Bitcoin is not just a scarce commodity, it’s the only known commodity in the universe that has a deterministic and fixed supply. As a result, bitcoin is not subject to any of the potential positive supply shocks that gold (or any commodity for that matter) may face in the future.”
Due to this characteristic of Bitcoin, investors continuously make the argument that BTC makes a better safe-haven asset than gold. This comparison between BTC and gold is what leads many to believe that Bitcoin is on a trajectory for long-term exponential growth.
Su Zhu, the CEO of Three Arrows Capital, one of the largest funds in the cryptocurrency space, said
“Any continued dump in $BTC would be extremely bullish as it would reveal we are following the gold fractal from the 1970s, as per below by Paul Tudor Jones--the legendary macro investor who successfully used fractals to predict the 1980s stock market supercycle.”
There is also a massive gap between the valuation of Bitcoin and gold. Currently, gold's market cap is estimated to be $9 trillion. In comparison, Bitcoin's market cap is less than 4% of gold’s valuation, which leaves a gap between the two assets.
Investors say Bitcoin's origins give it strength
Tyler Winklevoss also noted that the anonymity of Bitcoin’s creator is a major positive factor for the digital ass.
He said that Bitcoin has evolved into a $330 billion asset and yet, Satoshi Nakamoto, the creator behind it, remains anonymous.
This only legitimizes and further strengthens the perception of Bitcoin as a proper store of value. He said:
“That fact that we don’t know who Satoshi is yet #Bitcoin’s market cap is $330 billion, is a testament to the fact that Bitcoin speaks for itself.”