The cryptocurrency sector is still licking its wounds from the FTX ponzi blowout, as the price of the largest crypto by market capitalisation continues to consolidate at around $17,000.

But as the walls seemingly close in around the burgeoning crypto sector, veteran commodity strategist at Bloomberg Intelligence Mike McGlone has kept his optimistic outlook on Bitcoin and the industry as a whole. McGlone suggest that Bitcoin could outperform gold in the future as a top competitor, as he explained on December 7.

Specifically, McGlone said:

‘The nascent technology/asset is a top contender to outperform the metal in the long term, as we see it, and is backing up into a too-cold price zone.’

He also posted a chart demonstrating ‘the Bitcoin-to-gold ratio at about the 10x level, which was first reached in 2017,’ adding that ‘in a world rapidly going digital, the benchmark crypto is a top competitor to old-guard gold.

Volatility is high but declining, says McGlone.

McGlone acknowledged that, at about four times the metal, Bitcoin’s 260-day volatility was relatively high, though much lower than in 2018, when it was at about ten times to that of gold.

McGlone stressed that ‘the crypto may be transitioning toward a high-beta version of gold and US Treasury bonds,’ concluding that ‘declining relative Bitcoin risk may only be a matter of time.’

This period of low volatility may not last long, however. Bitcoin’s historical volatility index calculated by Bitmex exchange (BVOL) has reached a level which historically tends to be followed by an explosive multi-month trend.

TradingView Chart
BTC historical volatility index VS USD price

As economic stressors compound globally, and analysts ponder the eventual refilling of the US’ strategic petroleum reserves in the months ahead, the question of radical asset repricing is a pertinent one. In particular, Gold’s role in a global energy-driven sovereign debt crisis.

Does Bitcoin – the hardest money to have ever been invented – fit into the coming rebalancing? Time will tell.

BTC trades at $16,850 at press time.

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