Also Bitcoin Miners: Good, Not Great & The New Normal For Inflation

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	Forwarded this email? Subscribe here for more Bitcoin Is Seriously Competing With Gold Also Bitcoin Miners: Good, Not Great & The New Normal For Inflation Ecoinometrics Dec 13   READ IN APP   Welcome to the Friday edition of the Ecoinometrics newsletter. Every week we bring you the three most important charts on the topics of macroeconomics, Bitcoin and digital assets. Today we'll cover: Bitcoin Is Seriously Competing With Gold Bitcoin Miners: Good, Not Great The New Normal For Inflation Each topic comes with a small explanation and one big chart. So let’s dive in. In case you missed it, here are the other topics we covered this week: Bitcoin At $100k: Bull, Base, Bear Scenarios Ecoinometrics · Dec 9 Read full story No Remake of the 2021 Bull Market for the Bitcoin Miners Ecoinometrics · Dec 11 Read full story Checkout the Bitcoin Market Monitor to understand what’s driving the market in just five charts: Bitcoin Market Monitor Ecoinometrics · Nov 18 Read full story Read the Bitcoin Market Forecast for the probabilities of key scenarios and the essential risk metrics to manage your portfolio: Bitcoin Market Forecast Ecoinometrics · Dec 6 Read full story If you aren’t subscribed yet, hit the subscribe button, to receive this email every week directly in your inbox: Upgrade to paid Bitcoin Is Seriously Competing With Gold The narrative of Bitcoin as digital gold has been around for a while, and it's now the dominant view of what Bitcoin represents for investors of all kinds. Bitcoin and gold have different properties. This suggests investors might want both in their portfolio as stores of value: Bitcoin: digital, highly portable, with significant growth potential Gold: physical, established over millennia But in practice, many investors will allocate only a small portion of their portfolio to store-of-value assets. This puts Bitcoin and gold in direct competition. At first glance, looking at the big picture, gold still dominates. The total market size of gold is about $18 trillion, while Bitcoin is at $1.9 trillion, about 10% of gold's value. However, this comparison might be misleading. Not all above-ground gold is tied to investment vehicles. The financial gold market is only about $5 trillion. This means Bitcoin already represents 40% of this market. If the current Bitcoin bull market continues, Bitcoin could overtake gold in terms of investment value. Bitcoin has now been de-risked: global bans are unlikely, it won't collapse as a bubble, and it's positioned to stay relevant for the long run. Bitcoin Miners: Good, Not Great The chart compares the performance of Bitcoin mining stocks against Bitcoin since the rally began in September. Bitcoin is up 76%, while the average mining stock has gained 58%. This is positive news for mining businesses. Their stocks should continue to rise since their profits are directly linked to Bitcoin's value. But is it impressive? Not really. These stocks have relatively small market caps and carry more risk than holding Bitcoin directly. Historically, this combination has led to much stronger returns compared to Bitcoin during bull markets. So while miners aren't a bad investment, they're underperforming expectations. For a deeper analysis of the Bitcoin miners trade, check out Wednesday's newsletter edition. The New Normal For Inflation The November CPI inflation data for the US is out: Headline inflation: 2.7% year-on-year, trending up Core inflation: 3.3% year-on-year, staying high The picture isn't encouraging. The Federal Reserve has managed to control inflation, but core inflation (especially in services) has remained flat for six months. The problem? It's stuck at a level much higher than before the pandemic. If this becomes the new normal, it will hit Americans with below-average wage growth the hardest. This could further widen the economic divide in the US. Consumers see this coming. The Michigan consumer survey shows the 5-year inflation expectations of 3% or higher since April 2024. This inflation level is becoming anchored, making it more likely to stick around. Meanwhile, the Federal Reserve continues to cut rates. This suggests they're comfortable with higher core inflation as long as it's stable. One explanation: higher inflation makes it easier for the US government to manage its debt. This steady devaluation of the US dollar is pushing more investors toward Bitcoin as a store of value. That’s it for today. I hope you enjoyed this. We’ll be back next week with more charts. Cheers, Nick P.S. We spend the entire week, countless hours really, doing research, exploring data, surveying emerging trends, looking at charts and making infographics. Our objective? Deliver to you the most important insights in macroeconomics, Bitcoin and digital assets. Armed with those insights you can make better investment decisions. Are you a serious investor? Do you want to get the big picture to get on the big trades? Then click on the button below. Upgrade Now You're currently a free subscriber to Ecoinometrics. For the full experience, upgrade your subscription. Upgrade to paid   Like Comment Restack   © 2024 Ecoinometrics 548 Market Street PMB 72296, San Francisco, CA 94104 Unsubscribe