Bitwise Says Just a 5% Capital Rotation from Gold to Bitcoin Will Send BTC to $242,000

Bitwise recently shared that even a minute reallocation from gold to Bitcoin would more than double the cryptocurrency’s current price.

Notably, Bitcoin has recently played contrarian to gold, the largest asset in the world. The precious metal rallied further to a new all-time high on Monday, while the “digital gold” remains sidelined at the moment.

Nonetheless, Bitcoin’s appeal still stands, and the prospect that it would attract capital from gold investors is gaining momentum. Interestingly, a recent report from Bitwise has highlighted that capturing even a tiny fraction of gold’s market cap would send BTC to uncharted territories.

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Impact of 5% Capital Rotation from Gold to Bitcoin

Bitwise Europe highlighted this point in its “chart of the week,” calculating its potential impact on the price of Bitcoin. The chart showed different percentage reallocations from gold to Bitcoin and the scenarios at the time of the report.

For context, Bitcoin traded at $107,240 at the time of the report. A 1% rotation of gold’s over $29 trillion market cap would take BTC to $134,270. Meanwhile, a 2% rotation further boosts the cryptocurrency’s price to $161,300.

For a 3% allocation, Bitcoin would rise further to $188,330, and a 4% reallocation would take the asset past $200,000 to precisely $215,360.

Interestingly, a 5% rotation from gold to Bitcoin would bring its price to $242,391, marking an over 2x, or 126%, increase from $107,240. Even at Bitcoin’s current price of $108,640, it still represents a 123% growth.

Remarkably, even the smallest percentage rotation would mark a new all-time high for Bitcoin. This represents the near and long-term potential of Bitcoin to record massive price increases as it matures as a digital alternative to gold.

Is a Rotation Possible?

Meanwhile, several commentaries have teased the prospect of Bitcoin demarketing gold. Analysts at CNBC dissected this possibility earlier in the month, asserting that Bitcoin will go much higher between now and the end of December.

The report highlighted the current decoupling between gold and Bitcoin, noting that the precious metal is usually the first mover. Furthermore, it expects BTC to start closing the wide gap, ensuring that gold consolidates while investors switch to benefit from the premier asset’s rally.

$3.6 trillion asset manager JP Morgan also highlights the sentiment that Bitcoin is undervalued against gold. The firm cited the volatility gap between both assets, predicting that BTC would rally to $165,000 to close it.

For Michael Saylor, Bitcoin would capture more than just a percentage but would outgrow gold. He predicted that the digital asset would grow 10x larger than gold, a development that would take Bitcoin to a valuation in the hundreds of trillions of dollars.