David Edwards
On December 16, the Bitcoin-to-gold ratio, a crucial indicator of the cryptocurrency’s buying power in relation to gold, hit a new all-time high (ATH). This milestone comes after gold was trading at about $2,650 an ounce, and Bitcoin (BTC) reached a record-breaking price of over $106,000.
The ratio of bitcoin to gold has reached 40:1.
On the social media site X, veteran trader Peter Brandt brought attention to this development, stating that the ratio—which calculates the price of Bitcoin divided by the price of spot gold—now stands at 40 ounces of gold per BTC.
“Next stop will be 89 to 1 — it will require 89 ounces of gold [to buy 1 BTC],” Brandt predicted.
This increase supports a growing consensus among cryptocurrency enthusiasts that Bitcoin, with its current market capitalization of $2.1 trillion, has the ability to catch up to gold, which is valued at an estimated $15 trillion.
The Road to a Digital Gold Standard for Bitcoin
Notable Cathie Wood, the founder of ARK Invest and a supporter of Bitcoin, repeated this view earlier in December, pointing to the cryptocurrency’s potential for development given its changing market dynamics. This narrative was further supported by Federal Reserve Chair Jerome Powell’s recent characterization of Bitcoin as a “digital version of gold,” which came at the same time as BTC crossed the $100,000 mark on December 5.
Increasing Mining Difficulty Indicates Bitcoin’s Increasing Sturdiness
This ATH coincides with the fact that, according to CoinWarz, the difficulty of mining Bitcoin hit a record high of 105 trillion on December 15. The growing computing work needed to protect the Bitcoin blockchain is reflected in mining difficulty, a metric that quantifies how tough it is to mine new blocks.
The network’s tenacity further emphasizes Bitcoin’s position as a stable and decentralized asset, with the next mining difficulty adjustment set for January 1, 2025.
