Bitcoin: Future gold substitute or short-term financial strategy?
Recently, I have been pondering a question that may explain the recent violent fluctuations in the cryptocurrency market: After BTC breaks the historical high, how can it continue to capture new incremental value? I believe the key lies in observing whether Bitcoin can become the core driving force of the new U.S. economic cycle, just like artificial intelligence, driving U.S. economic development. This trend has already been initiated by MicroStrategy, but challenges remain.
Behind the fluctuations in the cryptocurrency market: MicroStrategy and the wealth effect of Bitcoin
Last week, the cryptocurrency market experienced violent fluctuations, with Bitcoin's price oscillating between 94,000 and 101,000. What caused such volatility? The core reason can be traced back to December 10, when Microsoft officially rejected a proposal at its annual shareholder meeting. This proposal, put forward by a U.S. think tank, suggested that Microsoft allocate 1% of its assets to Bitcoin as a hedge against inflation.
This incident triggered a strong market reaction, causing significant fluctuations in Bitcoin's price. Many people began to worry about what kind of growth Bitcoin could bring after breaking the historical high. Some market leaders started trying to replicate MicroStrategy's successful experience by promoting the strategy of adding Bitcoin to company balance sheets, believing it could help companies combat inflation and achieve performance growth.
Can Bitcoin become a substitute for gold?
When discussing whether Bitcoin can replace gold, we must first understand that gold's status as a global value storage asset is not solely based on speculation but on its universality and cultural recognition. Historically, gold has been regarded as a precious item with the following characteristics:
Physical properties: Gold has a bright luster and is easy to process, making it not only valuable but also usable as decorative items, widely applied.
Scarcity: The limited production of gold makes it a valuable currency storage tool.
Global distribution: The mining of gold does not rely on specific cultures or technologies, so almost every civilization can access it and understand its value.
However, it is unrealistic for Bitcoin to replace gold's position in the short term. The mining of Bitcoin relies on a large amount of computing power and electricity, making its acquisition very centralized, especially in resource-rich areas. In contrast, countries with scarce resources find it difficult to participate in Bitcoin production and usage, limiting Bitcoin's potential as a global value storage tool.
Moreover, with Trump's return to the American political arena, the trend of globalization has reversed, and the hegemony of the dollar has also been challenged. The value of Bitcoin is largely denominated in dollars, and if the international status of the dollar declines, the value of Bitcoin may also be affected.
Therefore, in the short term, Bitcoin is highly volatile and cannot store value as consistently as gold. Furthermore, in the face of inflation, gold remains a more reliable choice. The volatility of Bitcoin is too high, making it difficult to become the first choice for professional investors.
Another possibility for Bitcoin: a financial strategy to promote company market value growth
However, in the short term, Bitcoin may have another path: becoming a tool for companies to enhance their market value and revenue. We know that MicroStrategy has transformed the appreciation of Bitcoin reserves into company performance growth, thereby driving up its market value. This financial strategy is indeed attractive to some companies with sluggish growth.
With the return of the Trump administration, U.S. economic policies may change, putting pressure on the stock market, especially against the backdrop of slowing growth in the AI sector. For example, Nvidia's financial report shows that revenue growth has begun to slow down, and it is expected to continue to slow in the coming months. Without new economic growth points, the U.S. stock market may face a correction.
In such an environment, some companies may choose to incorporate Bitcoin into their balance sheets like MicroStrategy as a strategy to combat economic uncertainty and inflation. If more and more American companies follow suit, even leveraging Trump's cryptocurrency-friendly policies to push Bitcoin prices up, it may help maintain a certain level of stability in the stock market.
Trump-supported policies will help these companies gain support from capital markets and promote the widespread adoption of Bitcoin. This strategy is more flexible and effective than other economic stimulus measures, especially in traditional industries and small to medium-sized enterprises.
Bitcoin as a new driving force in Trump's economic cycle
Whether Bitcoin can become the core driving force of the new U.S. economic cycle is another issue worth paying attention to. With Trump's return, the implementation of his economic policies will bring uncertainty, especially regarding corporate taxes and fiscal deficits, which may trigger certain market fluctuations. In this context, how to stabilize the economy by promoting the adoption of Bitcoin has become a strategy worth exploring.
In recent years, Trump's attitude towards cryptocurrencies has been relatively positive, providing an opportunity for Bitcoin's potential rise. In the upcoming economic cycle, Trump may promote domestic companies to allocate Bitcoin in their balance sheets to stimulate economic growth. This strategy may be favored by certain companies with sluggish growth, especially those experiencing a decline in their core business, as Bitcoin allocation can enhance their market value. The success of MicroStrategy exemplifies this financial strategy, as it achieved rapid growth in market value through Bitcoin allocation.
Additionally, the 'Buffett Indicator' of the U.S. stock market has currently exceeded 200%, indicating an overvalued state of the stock market. In this situation, some companies relying on traditional industries may seek new growth points, and Bitcoin, as a new asset allocation method, may become their choice.
