Recently, it seems that a historic confrontation is taking place in the global financial markets, namely the war between gold and Bitcoin.
Since Trump's election, Bitcoin has skyrocketed, surpassing $100,000, with a gain of over 40%. In contrast, gold started to decline from the moment Trump began leading in election votes. In fact, from the time Trump was ahead in the elections, I stopped being bullish on gold.
Trump mentioned incorporating Bitcoin into the national reserves, but it should be noted that every member of his team holds Bitcoin, so whether this is for personal gain is known only to him.
Such behavior will obviously challenge the reserve value of gold. Even Fed Chairman Powell acknowledged this point in his speech last week.
In the recently passed November, the central bank announced reserve data indicating, after six months, we have begun to increase our gold holdings again, which seems to be a symbolic event.
In the past six months, gold has just broken through the previous peak of over $2400, continuously rising. At this moment, re-entering seems to carry the suspicion of being at a peak.
A few years ago, I indeed suggested that foreign exchange reserves should not buy U.S. Treasuries but instead buy gold and tech and resource stocks. However, since last year, I believe this is no longer appropriate.
Now, it seems that China and the U.S. are in a confrontation, both searching for their new value anchors.
Gold and Bitcoin have been positively correlated for most of the past decade before this year, driven by the logic of combating the excessive issuance of the dollar, both serving the dual roles of being inflation-resistant and a safe haven. Back then, Bitcoin was still referred to as digital gold.
However, since the beginning of this year, the relationship between the two has changed and is starting to become a competitive one. It is evident that Bitcoin currently has the upper hand, not only in terms of price gains but also in the total amount of capital inflows, which are beginning to dominate. If it continues to rise, the total value of Bitcoin will surpass the value of all the gold reserves in the world.
Has the era really changed?
I personally believe that the logic of gold has not changed significantly, even over thousands of years.
The underlying logic of cryptocurrencies and tech stocks is consistent, both driven by tech accelerationists represented by Musk and the combination with Trump, leading to this rapid increase. Essentially, this rise is stimulated by news, and generally, such news-driven gains will be completely erased. However, now, once these declines are erased, it could lead to a disaster because the total volume is simply too large, already being the largest bubble in history.
This is either a genuine monetary revolution, a technological revolution, a change encountered once in a century, or a complete Ponzi scheme; it has become a choice of one or the other, and everyone is already involved.
