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Sub-$22K Bitcoin looks juicy when compared to gold’s market capitalization

Bitcoin’s (BTC) price is down 56% year-to-date, but the correction was not strong enough to remove the digital asset from the list of top-20 global tradable assets. Bitcoin’s current $400 billion market capitalization stands higher than traditional companies like Exxon Mobil, Walmart and Procter & Gamble, but there’s always the question of whether a direct comparison between a commodity like Bitcoin and equities is valid. 

Most valuable tradable global assets. Source: 8marketcap.com

Analysts and investors favoring stocks constantly remind crypto advocates that Exxon Mobil posted $25.79 billion in earnings over the past 12 months, as a justifying example of its valuation. But on the flip side, earnings don’t necessarily explain how Boeing booked $16.1 billion losses in two years, even as it holds an $87.1 billion market capitalization.

Measuring a commodity market value can be tricky. For example, in the case of silver, only 50% of precious metal is used in industrial applications. There are individuals and companies holding the asset for investment in the form of bars, coins, or jewelry and these are not “productive” revenue-generating assets.

Bitcoin’s value is vastly inferior to gold’s $11.2 trillion market capitalization, but what does “$400 billion” even mean, and how does it compare to broader asset classes such as global equities, real estate and debt markets?

Was the Bitcoin “digital gold” thesis wrong?

The first question one should ask is: Has gold been a good store of value over the past five years? To find answers, traders have to compare its price against other trillion-dollar asset classes like global equities, oil and real estate. The overall goal for any store of value is to maintain the purchasing power, regardless of price fluctuations during the period.

Gold vs. WTI oil, S&P500 index, and Case-Shiller Home Price. Source: TradingView

From July 2017 until July 2022, gold has underperformed the remaining asset classes by 18% or higher. The precious metal broke above $2,000 in August 2020, but it could not keep up with the ever-growing…

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