Bitcoin, Gold, and the Hard Currency Renaissance

Nakamoto 2025-11-5 12:51 31066人围观 BTC

Key Summary As the global money supply continues to expand and confidence in the fiat system is shaken, Bitcoin is emerging as a reliable hard currency alternative alongside gold. A fair value framework based on money supply, hard asset allocation and Bit

key summary

As the global money supply continues to expand and confidence in the fiat system is shaken, Bitcoin is emerging as a reliable hard currency alternative alongside gold.
A fair value framework based on money supply, hard asset allocation and Bitcoin’s share of the store-of-value market suggests there is long-term upside potential, especially in an inflationary scenario.
Regulatory clarity, increased institutional access, and Bitcoin’s low correlation with traditional assets provide compelling reasons for modest but strategic portfolio allocation.

The most useful conversations about cryptocurrencies don’t start with block times or cryptography; they start with the monetary system. When money supply compounds and confidence in policy waxes and wanes, investors may seek hard assets—tangible scarce resources with intrinsic use value whose supply is difficult or costly to expand. This is the framework for thinking about Bitcoin today: not as a technological curiosity, but as a competitor to the “hard currency” mantle that has historically been dominated by gold.

In a recent discussion, we covered first principles valuation frameworks, the changing regulatory regimes in the US and UK, and the specifics of considering Bitcoin and crypto assets in portfolio construction. What follows is a distilled narrative and practical script from that conversation.

Model: Three levers that drive fair value

We first realize that global M2¹(broad money supply) follows an exponential curve over long periods of time ² Growth, historically, has been ~5% per year as inflation target (~2%) plus real growth (~3%) is what modern central banks and productivity averages provide.³ In contrast, hard assets do not expand with policy. Gold supply growth is slow (~1%-2% per year); ⁴ The Bitcoin supply is fixed in the code, with a known glide path.⁵、

Based on these basics, we constructed a three-leverage model:

M (money supply): Global M2 is forecast to grow under three systems in the next five years - deflation (3%), base case (5%), and inflation (7%).
H (Hard Currency Share): Estimates the share of global M2 that investors choose to hold as “hard currency”. Historically, gold's market capitalization has fluctuated from ~10% of M2 during calm periods to >30% during inflationary periods. The long-term median is closer to 15%. ⁶、
B (Bitcoin’s share of the hard currency basket): Today, Bitcoin has roughly a mid-single-digit share of the combined Gold+Bitcoin “hard currency” basket (~8% in our snapshot).⁷ We can reasonably model the increase in share as adoption expands.

Multiplying these three and dividing by the forward supply (in this case, the expected number of available gold ounces or the expected number of available Bitcoins), you can back up the implied accepted value of both gold and Bitcoin. This avoids the dead end of "no cash flow, no value" by anchoring in what is actually competing for investors' scarce balance sheet space: a store of value.

What does the scene illustrate?

Base case (5% M2, H ≈ 15%, B rising to ~15% of basket by 2030):

Assuming supply growth of ~1.5% and Bitcoin absorbing some of the incremental share of hard currency bidding, this means that by 250, Bitcoin prices will reach ~$2030 (compound annual growth rate (CAGR) in the mid-teens) and gold prices will be above $4,000/oz.

Inflation (7% M2, H rising into the 10s/20s, B shares rising faster):

The total amount of the hard currency pie expands, and Bitcoin’s share becomes larger and larger. Compounding is non-linear; this is how you close the gap to the oft-argued Bitcoin price of 500K+.

Deflationary case (3% M2, H drift ~10%–12%, B moderate gain):

The total is lower and share growth is slower. Given the policy response function, we think this is unlikely, but not impossible. As of this writing, the money-printing and deficit-spending response functions of most Western governments remain strong, and it is difficult to see deflation in this context.

Two clarifications are important. First, these are system-level results, not trader folklore. If M grows and investors decide to store greater wealth in supply-constrained assets, prices will adjust. Second, gold is rising faster than our base case path, in part because hard money shares (H) are rising ahead of Bitcoin B shares. When the "multiple expansion" in the basket is first captured by gold, you'll see what we see: gold sprinting ahead as Bitcoin consolidates. In the past three years, central banks have accumulated more than 1,000 tons of gold each year, much higher than the average level of 400-500 tons in the previous decade. In the first half of 2025, many official institutions continued to actively increase their holdings, reflecting the record-high pace of reserve diversification. ⁸

Regulation: From gray area to green light

So far in 2025, the regulatory pipeline has been clearing.

United States: Spot Bitcoin exchange-traded products (ETPs) will normalize access in 2024.⁹ Two legislative pushes are important right now:

The Stablecoin Act (the “Genius Act”), which already formalizes reserves and regulations, will likely direct large, sustained bids into short-term U.S. Treasuries as backing collateral. This deepens the consolidation between the cryptocurrency trajectory and the U.S. dollar in the short term. ¹⁰

The Clarity Act seeks to resolve the commodity/security classification confusion that has forced token-by-token litigation.¹¹ The clean line is the oxygen of product development and institutional policy.

UK: The London Stock Exchange (LSE) is opening up retail access to Bitcoin and Ethereum ETPs, catching up with continental Europe and expanding its buyer base.¹²
Retirement pipeline: The possible inclusion of digital assets in a 401(k) structure is a step change in functionality.¹³ U.S. retirement assets exceed $45 trillion;14 Given Bitcoin’s fixed issuance, even 1%-2% penetration is needle-moving over time. It also shifts marginal price setters from momentum traders to allocation committees with rebalancing rules - a stabilizer of long-term volatility.

Net, the regulatory tide is shifting from “licensed experimentation” to mainstream integration. This does not guarantee one-way price movement, but it does improve market depth, liquidity quality, and the potential persistence of demand.

Volatility, Correlation, and the Portfolio Math That Really Matters

Bitcoin remains volatile – annualized numbers around 60%-70% are common over longer samples – but correlations with traditional assets tend to be lower (usually below 0.2 compared to major assets).¹⁵ This combination—high standalone volatility but low correlation—means that small allocations have the potential to significantly increase expected returns with only a small increase in total portfolio volatility, especially if you rebalance on a schedule. Importantly, we must note that just because this has occurred in historical performance records does not mean that it will always occur, but it is still informative to judge different assets based on their real-time historical performance records.

Stablecoins: The quiet flywheel

It’s easy to overlook, but regulated stablecoins are a macro flywheel. If reserves are primarily short-term Treasury bills, then every incremental dollar of stablecoin growth is a structural bid for the front end of the U.S. Treasury yield curve, while every incremental dollar of decentralized finance (DeFi) or dollar-track-preferred payments activity becomes a demand for safe collateral. This is an old world/new world bridge that strengthens rather than weakens the dollar’s network effects. It also incentivizes policymakers to cultivate healthy entry points rather than drive out overseas activity. The total value of all stablecoins in circulation exceeds $200 billion, with over 98% backed by the U.S. dollar. ¹⁶

What about Bitcoin “L2” and builds based on Bitcoin?

There are meaningful experiments on top of Bitcoin, but Bitcoin's economic gravity is a store of value. If you need to perform high throughput, low latency for consumer applications or marketplaces, Ethereum, Solana and other L1/L2 ¹⁷ The stack is currently a more natural home. This is not a criticism of Bitcoin, but an observation of product-market fit. Bitcoin excels as a collateral and savings technology; other chains are where programmability and user experience (UX) are iterating the fastest.

Summarize

Bitcoin does not need to “replace” fiat currency to serve as an investment. It needs the money supply to keep compounding, a fraction of global savings to select assets with credible scarcity, and access to stay open and professional. These conditions are already met. The reasonable institutional posture is not minimalism, but pluralism.

¹ Cash + Checks + Savings + Small Time Deposits + Retail Money Market Balances.

² An exponential curve is the visual shape you get when something grows (or decays) over time at a constant percentage rather than a fixed absolute amount.

³ Source: Bloomberg. Data are measured from 1970 to 2025.

⁴ Source: "Gold Demand Trends: Full Year 2024," World Gold Council, 1/31/25.

⁵ Source: S. Nakamoto, "Bitcoin: A Peer-to-Peer Electronic Cash System," 2008. https://bitcoin.org/bitcoin.pdf

⁶ Source: Bloomberg, CoinGecko, World Gold Council, Clio Infra, USGS, Our World in Data, as of 12/31/24. Historical performance is not indicative of future performance and the value of any investment may fall.

⁷ Source: Bloomberg, CoinGecko, World Gold Council, as of end of May 2025. Historical performance is not indicative of future performance and the value of any investment may fall.

⁸ Source: “2025 Central Bank Gold Reserves Survey,” World Gold Council, 6/17/25.

⁹ Source: E. Su, “SEC approves Bitcoin exchange-traded product (ETP),” Congressional Research Service, 1/24/19.

¹⁰ Source: S.-1582: The National Innovation Act to Direct and Establish U.S. Stablecoins (Public Law 119-27), U.S. Congress, 2025. congress.gov.

¹¹ Source: "HR 3633: Digital Asset Market Clarity Act of 2025" (CLARITY Act), U.S. Congress, 2025. congress.gov.

¹² Source: P. Jha, “Bitcoin and Ethereum ETPs debut on London Stock Exchange after FCA nod”, Cointelegraph, 22/24/5.

¹³ Source: “Democratizing Access for 401(k) investors for alternative assets” (Executive Order 14330), Federal Register, July 25, 2018.

¹⁴ Source: "Quarterly Retirement Market Data: Q2 2025—Total Retirement Assets at $45.8 Trillion" [Report], Investment Company Institute, 9/18/25.

¹⁵ Source: Artemis Terminal, data measured from 2013 to 2025.

¹⁶ Source: “A coin here, a coin there, stablecoins everywhere” [Blog post], Federal Reserve Bank of Atlanta, 1/13/25.

¹⁷ Layer 1 is the “backbone” of the blockchain; Layer 2 builds “fast lanes” on top of it, easing congestion while still using the main road for final security and settlement.