Bitcoin is the top asset for decades, but $100,000 is still a long way off

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A recent report from Goldman Sachs, naming bitcoin as the best performing asset of the year so far, has bitcoiners dreaming of the $100,000 dream once again.

This is not the first time bitcoin has outperformed other assets. Indeed, there have even been reports that have labeled him as one of the top performers of the past decade. But what are the chances of history repeating itself? In the event of a new bull market, will bitcoin once again become, as Paul Tudor Jones said, the fastest horse in the stable?

Over the past 10 years, bitcoin has seen gains of over 5,700%. By comparison, the NASDAQ did 336%. When those same numbers are looked at over a five-year period, bitcoin is up 96% while NASDAQ is up 69%.

But it becomes more interesting when the deadlines are further shortened. Over the past two years, bitcoin has actually fallen 28% while NASDAQ has lost 11%. Year-to-date, bitcoin has gained 39% while NASDAQ has gained 8.8%.

Read more: What is the price of mobile bitcoins right now?

For bitcoin to reach $100,000, it would need to make gains of around five times its current price. This is less than the returns made by those bought before the 2021 crypto bubble and far less than early risk takers years ago.

In 2019, when bitcoin was hovering just above the $7,000 mark, jumping to $100,000 was a tantalizing dream. But dreaming big with bitcoin seemed very rational. Here is this new decentralized financial asset, which no entity could control, and which could disrupt the financial system, increase financial freedom and enrich many people.

Back then, it seemed easier to believe that you could change the world if the disruptive asset you were promoting could yield huge returns. But the bitcoin revolution may seem less enticing as its potential future earnings dwindle.

Is bitcoin good or just very lucky?

And there’s the elephant in the room to consider. Was bitcoin’s success actually due to particularly lenient financial conditions and a bull market that lasted more than 10 years? What if bitcoin was just lucky enough to be able to absorb the excess capital created in the era of quantitative easing?

When bitcoin peaked in 2021, interest rates were negative, financial conditions were loose, and the stock market was hitting all-time weekly highs. Obviously, given the market and financial conditions, bitcoin had it easy. We also need to know exactly how much of the incredible bull run was made possible through leverage and fraud.

Considering the bubbly road that bitcoin has traveled to $69,000, the road to $100,000 seems, in comparison, not so easy. Certainly not as trouble-free as many might have thought in 2019 and 2020. Tim Draper may still be optimistic about bitcoin’s value at $250,000, but another attempt to go to the moon may have to come. do it in a more orderly way.

Read more: Crypto price predictions for 2022 were so wrong

Fraud and excessive leverage in crypto may be less possible in the future as the crypto space becomes more regulated and enforcement efforts intensify. Not to mention bitcoin’s allure, as the trendy new thing has surely been shaken by scandals and time itself. So, could bitcoin be an old horse?

Bitcoin against the US Treasury

Indeed, there is a new perspective to consider when thinking about the potential future earnings of bitcoin. During the first vicious bear market since the financial crisis, many assets crashed, and some like Tesla even crashed as much as bitcoin. For the first time ever, bitcoin’s speculative appeal could be overshadowed by other sexier and potentially even riskier assets. To put it simply, given the current market conditions, there are many potential bargains and bitcoin is no longer the only player in the game that carries the allure of a highly speculative asset that can make exponential gains.

But it’s not just risky assets that compete with bitcoin. It also comes up against the most risk-free asset in the world, the US Treasury. They say you can’t go wrong with US Treasuries unless you believe the US government will default or the US dollar will crash. These are two highly unlikely scenarios. Treasuries can make a huge comeback when the Fed pivots and starts moving again towards a lower interest rate environment (although holding them would give the investor unknown duration risk).

The Treasury market is relatively easy to understand and highly correlated to interest rates. With short-term Treasuries yielding above four percent and longer ones hovering around three percent, their secondary market coupon price is also lower than when interest rates were negative. Indeed, some long-term Treasuries and government bond market funds are down 40% or more from their highs.

Ethereum could still be bitcoin’s biggest rival

If all remains healthy in the crypto world and bitcoin starts to rise exponentially, there is only one last thing to consider: if this will be the coin that makes the biggest gains from now on. If it is to follow a similar trajectory to gold, it may well stabilize at a certain market capitalization and price range, with the other members of the family taking on a more volatile and speculative aspect.

In this scenario, Ethereum may be the one that shines. Unlike bitcoin, Ethereum did not hit a new low during the FTX-induced crypto crash. It also mirrored bitcoin’s rally this month to an equivalent of 33%.

All in all, this time around, bitcoin’s road to $100,000 could be a lot tougher than previously imagined, due to new competitors and a new financial environment. However, if bitcoin survives these difficult times, it would have survived a global economic crisis for the first time, a badge of honor that might be enough to revive its hopes.

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