Popular cryptocurrency analyst Benjamin Cowen said one metric shows how strong Bitcoin’s (BTC) performance has been over the past decade compared to other major markets such as gold and equities. In a new video, Cowen said that when taking into account the M2 money supply, gold is trading well below what it was a decade ago. M2 is a measure of the current money supply that takes into account cash, check deposits, and other easily convertible assets.
“When you factor in the money supply, gold is nowhere near as in 2011. The bull run that you’ve seen gold going on since 2011 seems to be about the same price, but when you actually factor in the money supply, it would have to pump 137% to reach the same valuation. When you compare this to Bitcoin divided by M2, you get a very different graph. It’s something that usually increases over time. When you factor in the money supply, the valuation of gold looks awful, so it absolutely sucks.”
says the same trend applies to other financial markets, including the SPDR S&P 500 ETF (SPY).
“Many charts look like this. For example, if you look at SPY divided by the money supply, what do you get? You really get something that doesn’t look that different. Bitcoin’s split into the money supply gives you a completely different story. It generally increases over time. Also, when taking into account the money supply, we can see that Bitcoin tested its all-time high in 2017 in the summer and almost tested it just a few weeks ago.”
Based on M2, Cowen says that gold does not necessarily qualify as an inflation hedge the way Bitcoin does.
“If you love gold and have it in your portfolio, I’d honestly expect it to rise over time, but that doesn’t necessarily mean it outperforms inflation. That doesn’t mean it outperforms many other assets, and you’ll likely have a lot more white hair until you reach your target valuations… While gold is something that moves today and has moved a little less than about 2%, overall, what did he actually do? What has it really done other than being beaten against Bitcoin, it hasn’t even been able to keep up with inflation.”
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