Introduction
In the last 3 months, we’ve seen gold hit an eye-watering $5,000 per ounce, whereas Bitcoin is 40% below its previous all-time high and currently fighting for air around the $74,000 mark. Traditional finance is screaming, “I told you so.” about gold, whereas the crypto moon boys, like myself, have gone a little quiet. So, at this point, everybody is asking the same question. Where should I put my money? Does it go into the 8,000-year-old rock or the 17-year-old Coke? Today, I’m giving you the data-backed verdict on what I believe to be the best investment right now.
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Gold Summary
So, let’s get started with gold. If you bought gold before the 2024 breakout, congratulations, you’re up big. But, here’s the problem. A $35 trillion asset moving this fast isn’t normal, and it’s definitely not sustainable.
We’ve seen central banks, especially in Asia, stacking up reserves at record levels. But, at $5,000 per ounce, the value play is starting to look a little like a top play.
Gold is a defense. It’s safe. It’s an insurance play. But, is it the investment that you want to make today?
Now, I’m looking at this 2-year parabolic run and comparing it to the classic Wall Street cheat sheet, are a few question marks. Now, of course, it does offer safety, but the chances of a 2-3x from this point are very little.
Keep in mind that a 2x from here would roughly require a $70 trillion market cap, and for a 3x, we would be clearing $100 trillion.
It is a great asset to have. I am absolutely not denying that. But, is it the best place for new capital coming into the market today? I’m not so sure.
Bitcoin Summary
Now, let’s take a look at the volatile sibling, digital gold, otherwise known as Bitcoin.
Bitcoin is currently in a clear downtrend. There is absolutely no denying that. It’s down roughly around 40% from its all-time high made late last year.
I think many people will see this as failure, but to many others, it is a big opportunity.
And now is probably a good time to remind people what Warren Buffett says, the best investor ever known. Be fearful when others are greedy and be greedy when others are fearful.
And recently, the fear and greed index for Bitcoin has just been in the toilet. So, it’s starting to look like the risk-reward situation for Bitcoin might be favorable, and that’s without even comparing the market caps.
Bitcoin is currently sat at a market cap of around $1.4 trillion compared to gold, as we mentioned, at $35 trillion.
Now, I’m not saying that Bitcoin is going to flip gold’s market cap anytime soon. But, if it just closes the gap and becomes 1/5 of the size of gold, we’re looking at a Bitcoin price of around $350,000.
Roughly a 5x return for Bitcoin is looking pretty juicy, especially when we think about gold’s market cap, and a 5x there is pretty much impossible.
At this point, the risk-reward just feels superior, and when you tie that in with the fact that we’re supposed to buy red and sell green, it starts to make a lot of sense.
Decoupling & War
It’s also worth noting that something fascinating happened over the last week.
While gold dipped on hawkish Fed news, Bitcoin managed to stand firm with seven green days on the bounce.
With the rest of the market very volatile and jittery right now with everything going on in the world, we could potentially be seeing a decoupling in real time.
And as well as talking about market cap, such an important metric, we also have to touch on supply and demand.
Now, when it comes to supply, with gold being at $5,000 per ounce, it is becoming very profitable to be mining gold.
Simply put, the amount of gold in circulation will always continue to rise.
So, recently, we have seen the supply of gold going up, but we’ve seen the demand grow higher, meaning price goes up and up.
However, we might not have seen much demand for Bitcoin recently, but the supply metrics are very interesting.
Bitcoin is capped at 21 million Bitcoin. That is hardcoded, and it is the highest amount we will ever see of Bitcoin in circulation.
However, because of lost keys and burned wallets, the actual amount of Bitcoin in circulation is estimated to be much lower than that.
One could argue that over time, we will see a decrease in supply rather than increasing, and when demand picks up, you know the rest.
In a world full of infinite money printing and rising oil costs, people are starting to pay attention to the assets that we can’t print more of.
With the current tensions in the Middle East, people are starting to see a new definition of safety when it comes to assets.
The question at this point is, would you rather leave your home with 10 kg of gold in your suitcase or just jump on the flight with a USB stick?
Finally, after all of these years, people are starting to wake up and understand the use case and the practicality of Bitcoin being digital gold.
And yes, of course, Bitcoin is the more immature asset at this point.
It has only been around for around 17 years, and it does react more violently to volatility and big world events.
There is no denying that at this point, gold is the safer play. It is the safe asset.
But, if you want to make gains, if you are looking for the higher risk-reward, then there is a strong case for Bitcoin.
Clarity Act
Before I give the final verdict, there is one more thing that we need to talk about, and it’s over in Washington.
The Clarity Act is the most significant crypto legislation to date, and it’s moving through the Senate right now.
Now, you might not be super early to Bitcoin at this point. It is no longer the 100x gem that it once was.
But, the fact that we don’t already have this legislation in place is a sign that we are still early enough.
So, what does this legislation actually change?
It allows the big money, we’re talking about the pension funds, the insurance companies, to treat Bitcoin with the exact same respect as assets like gold.
Now, some people will suggest that once this is passed, it will open the floodgates to Bitcoin continuing to rise and will make previous bull runs look tiny.
Gold already has its legal framework, and Bitcoin is just about getting there right now.
But, being completely realistic, we have to understand that Bitcoin is already a $1.4 trillion asset.
That is not a small amount of money, and that is exactly why it is no longer a 100x play.
I don’t feel like I need to say that, but it’s best to be sure for some people.
My Verdict
Now, to wrap this one up, you are probably thinking this guy posted is so pro-Bitcoin, it’s untrue. And it’s kind of to be expected. I’ve been in the space for over 8 years now.
However, the only reason I’m leaning in Bitcoin’s favor right now is because the maths make sense.
We’re removing the emotion, and we’re looking at the discount, we’re looking at the fear, the greed, the supply, the demand.
All of these metrics make sense to be risk-on with Bitcoin right now rather than gold.
But, like I said earlier, if you are looking for a safe asset, then absolutely stick with gold.
If you’re looking to make money and to grow your portfolio, then Bitcoin is probably offering the better risk-reward.
But, look, I’m not telling you to go all in on Bitcoin right now, and I’m also not saying that gold is a bad asset.
But, if you was to ask me where I was putting my dollar-cost average capital this week, it’s Bitcoin.
Very simply put, gold feels like it’s somewhere close to a top, whereas Bitcoin feels much closer to a bottom than it does a top.
And that’s not to say that Bitcoin can’t go lower from but I do want to hear from you guys.
Let me know down below in the comments if you are playing it safe with gold or looking to take some risk with Bitcoin.
Maybe the answer is none. Maybe you’re looking at stocks.
Let me know down below.
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Thanks for watching, and I’ll catch you in the next one.