If we are to believe the latest edition of the Capriole Investments newsletter, Bitcoin is in for a gigantic breakout. After the 2024 halving, Bitcoin will become the “hardest” asset in the world, according to Capriole, and from then on it will be a better investment than gold.

An outbreak of the 1970s

Gold experienced an explosive breakout in the 1970s and if Capriole Investments' analysis is to be believed, Bitcoin could well repeat that trick. Despite the fact that Bitcoin is currently dangling nearly 80 percent below its all-time high, not everyone is negative about the prospects for the digital coin.

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Capriole Investments is convinced that the year 2023 will be a good one for Bitcoin as a reserve asset. According to Capriole, the reason for this lies in world financial history and in particular the year 1971. This was the moment when America under President Nixon definitively disconnected the dollar from gold.

As a result, gold had a fantastic couple of decades and fifty years later, according to Capriole, it is Bitcoin's turn. “Because gold was much smaller than Bitcoin in the 1970s, it had the ability to take big leaps in a period of inflation and high-interest rates,” said Capriole.

Potential lies in the numbers

According to Capriole Investments, Bitcoin's potential lies in the numbers. At the time of writing, Bitcoin's market cap represents about 2.5 percent of gold's market cap. “Given that Bitcoin represents only 2.5 percent of gold's market cap, the 80 percent decline is only 2 percent of the hard money (gold + Bitcoin) decline,” said Capriole.

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“Bitcoin has more growth potential than gold because it is smaller. Comparable demand for both assets results in over 40x growth for Bitcoin,” said Capriole. This mainly teaches us that gold is currently seen much more as a safe haven than Bitcoin. The demand for gold is currently significantly greater than that for Bitcoin. However, after the next halving, Bitcoin's inflation is lower than gold's.

That's when it can get interesting. “Furthermore, there are many other properties that make Bitcoin better than gold. Consider, for example, the decentralization and the possibility to send Bitcoin directly. Most importantly, Bitcoin is harder than gold,” said Capriole Investments.