Bluford Putnam, chief economist as well as taking care of supervisor of CME Group, thinks bitcoin is an “emerging competitor” to gold.
In a CME-presented explainer video uploaded by Bloomberg on Wednesday, Putnam claimed the yellow steel’s continuous manufacturing, most likely to rise in 2021, contrasts with bitcoin‘s fixed supply.
The World Gold Council estimates roughly 197,576 metric tonnes (217,790 tons) of the shiny metal have been mined throughout history with an additional 2,500-3,000 tonnes (2,756-3,306 tons) added to stock levels each year.
By contrast, bitcoin is designed to have a fixed supply of 21 million units – the maximum that can ever be created as “block rewards” obtained via proof-of-work mining. To date, 18.62 million BTC have already been mined.
However, Putnam cautioned viewers that fixed supply does not necessarily equate to less volatility. In fact, the opposite is more true when supply is relatively inelastic.
“Shifting patterns with demand can have very large and abrupt impacts on prices, bitcoin has illustrated this point,” he said.
Putnam noted his firm has begun to notice gold’ s winding down charm as a bush versus international political threat.
“In the 2017-2020 period, the mostly ups and occasional downs of the gold price appeared to be directly tied to [U.S. Federal Reserve] policy shifts more than anything else,” he claimed.
The chief economist included that, given that equities react to the very same driving pressure in markets all over the world, the gold-equity partnership has a tendency to end up being tighter, hence deteriorating gold’s safe-haven charm.