Development trends and factors indicate that Bitcoin is expected to repeat the history of gold's surge and break through $13,000

Web bot ^[1] creator Clif High has previously predicted that by this time next year the price of Bitcoin will be equal to the price of three ounces of gold, and while his view still seems strange, it is not impossible.

In a way, this prediction of Bitcoin going from a meager $1180 to over $13,000 looks attractive. The technicalities of achieving this are different from our general understanding of the laws of supply and demand. Bitcoin would be a repeat of 1979/1980 (a period during which gold prices skyrocketed).

The historical relationship between Bitcoin and gold fits in with High’s data, which has been confirmed in other cases. High’s latest forecast shows that Bitcoin will grow in tandem with gold prices, rising from its current $1,206 to around $4,800 by March next year, a nearly 300% increase.

How was this increase derived?

According to records, between 1978 and 1979, the price of gold increased by more than 120%, from $207 to $455, creating a record high at the time, mainly due to high inflation caused by strong oil prices, the impact of Soviet intervention in Afghanistan and the Iranian Revolution, which prompted investors to enter the precious metals industry on a large scale.

By January 1980, gold prices had soared to $850 an ounce as investors sought safe-haven assets - gold had risen nearly 310% from 1878 to January 1980.

It is difficult to calculate the total amount of gold ever produced, but a rough estimate is that the total amount of gold available is about 6 billion ounces - based on current production, the gold: Bitcoin ratio is 375:1 (about 16 million Bitcoins have been mined so far).

The high productivity of gold does not necessarily mean a higher price, because the amount of gold to be extracted in the future is unknowable. For Bitcoin, according to the design of its white paper, there will only be 4.8 million Bitcoins left to be mined in the next 123 years.

Other reinforcing factors

As the prices of Bitcoin and gold rise, Bitcoin is more difficult to obtain than gold. Although both show the potential to increase in value over time, the recent performance of Bitcoin is shaking the prospects of gold as the main store of value in the future. What's more, the price of gold fell for the first time in three years last year.

Somehow, the debate about gold being overvalued and bitcoin being undervalued is making the discussion about bitcoin and gold prices more complicated. As common sense is forming among people, bitcoin prices are growing, and people from various industries are improving their understanding of bitcoin’s usefulness, different opinions are forming.

Add in Bitcoin’s granular supply model and the fact that Bitcoin is considered stronger than gold in several ways (including being immune to questionable banking practices) — though Bitcoin’s reliance on electricity and the internet still works against it — and a sudden surge in the price of Bitcoin is not out of the question.

More and more millennials are finding Bitcoin more usable and relatable than gold, despite its intrinsic value, tangibility, and centuries of recorded existence.

Bitcoin is decentralized, easy to move, difficult to defraud, and increasingly difficult to mine over time. These fundamental characteristics could support a price even higher than High's $13,000 forecast, with a corresponding increase in the bitcoin market cap to as much as $40 billion over the next year.

Notes (↵ returns to text) Web Bot or Web Bot Project refers to a computer program that can predict the future by tracking keywords on the Internet. When it was first designed in 1997, its purpose was to predict the future trend of the stock market. The creators of the Web Bot Project, Clif High and his assistant George Ure, kept the technology and algorithm confidential, and the published reports had to be paid to read.