Bitcoin vs. Gold: Top Fidelity Analyst Reveals the Future of Wealth Storage

Author: Samuel Edyme, Bitcoinist; Translator: Baishui, Golden Finance

Fidelity Global Macro Director Jurrien Timmer recently commented on the debate over whether Bitcoin and gold are more reliable stores of value, outlining scenarios for whether each asset class can hedge against inflation, depending on the economic environment.

Money Supply and Asset Valuation Theory

Timmer's reasoning is based on the concept of "fiscal dominance," where the government takes action to expand the money supply, threatening the purchasing power of money. He noted that inflation is brewing, which is confirmed by the historical M2 money supply/CPI relationship.

Chart showing the money supply and inflation rate in the United States. Source: Jurrien Timmer on X

Although Bitcoin and gold can be said to be the most inflation-resistant assets according to theory, Timmer believes that this environment has not yet been fully realized even after the Fed's recent hawkish stance.

In addition, due to its love of volatility, Bitcoin is also called "digital gold", "gold 2.0" and "index gold" because on the one hand, Bitcoin has all the monetary characteristics that gold has. But according to Timmer, it is also a new Internet technology.

However, for Bitcoin to have and maintain its status with gold, the total amount of fiat money must continue to grow and grow at a rate far above the normal trend.

Timmer said that despite the recent surge in the M2 money supply, the Federal Reserve's tight monetary policy kept this phenomenon short-lived. This suggests that gold and Bitcoin may not yet be an absolute store of value.

Currently, the price of Bitcoin has soared to $69,523 after the latest CPI report showed a slowdown in inflation, which may indicate that its status as a store of value is strengthening. BTC price is trading sideways on the 4-hour chart. Source: BTC/USDT on TradingView.com The report also had a positive impact on gold prices, which have risen 0.91% in the past 24 hours and are currently trading at $2,336.

The impact of Treasury yield correlation on Bitcoin

At the same time, according to the latest data reported by Barchart, Bitcoin (BTC) price has lost correlation with the 10-year U.S. Treasury bond (UST) yield, and the correlation has dropped to the lowest level in the past 14 years, at -53.

Correlation of Bitcoin (BTC) with 10-year U.S. Treasury (UST) yields. Source: BarChart on X

This shows that BTC is currently developing independently and the market is not affected by traditional fiscal instruments such as U.S. Treasury yields. This indicator determines the rate of return investors receive in government securities.

This could indicate that Bitcoin is becoming more loosely tied to the traditional financial system, which could be the beginning of its evolution into its own unique asset class.

If Bitcoin continues to decouple from these traditional financial indicators, it could significantly enhance its viability as a better non-traditional hedge against fiscal instability.

However, Timmer acknowledged that the common limitations of Bitcoin and gold as a store of value are based on economic conditions that have yet to emerge, particularly in terms of money supply and inflation.