Why Bitcoin Could Outperform Gold in the Coming Decade
Around the world, governments are borrowing more money than ever before relative to their GDP. Many are now in a situation where they need to borrow new money just to pay interest on existing debt, like taking out one credit card to pay off another.
The value of a country’s currency is based on trust. Trust that the government will manage its finances responsibly and the central bank will maintain stable monetary policy. When debt grows too large, that trust weakens. When central banks use tools like quantitative easing (QE), they buy government bonds (i.e government debt) and inject new money into the system. This effectively transfers government debt onto the central bank’s balance sheet, expanding the overall money supply.
As the amount of debt and interest payments rise, the burden erodes the value of money over time. In such environments, investors often seek “store of value” assets that hold purchasing power even as fiat currencies lose it. Gold has historically been the most trusted option. Real estate is also an excellent store of value. Bitcoin shares gold’s key qualities as a scarce, decentralized store of value, but it also has unique advantages:
It can be divided into 100 million smaller units (18 decimal places in practice), making it easy to transact.
It can be sent globally, securely, and almost instantly with minimal cost.
Despite these strengths, Bitcoin’s total market value is only about 7% of gold’s. As adoption grows and more people recognize its store-of-value potential, I believe Bitcoin will continue to appreciate faster than gold over time.
Investment Strategy
My core framework begins with identifying periods when major central banks are expanding their balance sheets, as these have historically been strong environments for store-of-value assets like Bitcoin. When liquidity is increasing at the global level, it signals a favorable macro backdrop for Bitcoin appreciation. Once that macro signal turns positive, I then analyze on-chain investor behavior to confirm alignment. Because Bitcoin operates on a transparent ledger, we can observe whether investors are accumulating (buying) or distributing (selling).
When both the macro environment and on-chain activity point in the same direction, expanding liquidity and rising accumulation, the probability of a sustained Bitcoin uptrend increases significantly.
Because Bitcoin accounts for over 60% of the total crypto market, it serves as the primary indicator for the broader asset class. When Bitcoin begins to appreciate, it typically drives capital flows into the rest of the market, lifting other crypto assets with it.
As we will see, most altcoins (other crypto than Bitcoin) are highly correlated to Bitcoin’s movements. The old saying “a rising tide lifts all boats” applies here. There are, however, short windows when altcoins outperform Bitcoin. Using specific macro and technical indicators, we can identify these periods with higher probability and adjust risk exposure accordingly: allocating more aggressively to altcoins during favorable conditions, and rotating back to Bitcoin or cash when the environment turns less supportive.
When the macro backdrop and on-chain signals align, the next step is asset selection. With over 10,000 cryptocurrencies in existence, it’s easy to lose focus on what truly matters. I prioritize assets that demonstrate real economic activity, either through strong revenue generation, indicating active protocol usage and cash flow, or through rapid user adoption that suggests future revenue potential. Projects that combine both current utility and growing adoption tend to offer the best risk-adjusted upside, as they are supported by tangible fundamentals rather than purely speculative narratives.
As you’ve likely noticed, my investment strategy follows a top-down approach. I begin by identifying favorable macro conditions, then look for signs of buying activity entering the market, and finally determine the right moment to move further down the risk curve by allocating to fundamentally strong projects.
You can think of it like fishing: first choosing the right season, then the lake, the spot on the lake, the time of day, and finally the lure. There’s never a guarantee of catching a fish, but by stacking these advantages, you significantly improve your odds of success.
Risk management
Even with the odds in our favor, there are no guarantees in investing. Even a strong poker hand like pocket aces loses around 15% of the time, and markets are no different. That’s why the first rule of investing isn’t about maximizing returns, but about protecting capital.
Crypto remains one of the most volatile asset classes in existence, with frequent and sometimes severe drawdowns. Bitcoin alone has experienced 30% corrections even within bull markets, and up to 90% declines during bear markets. While my framework aims to avoid the most extreme downturns, drawdowns of around 30% should still be expected, especially since this strategy does not use hedging instruments typically available to institutions.
I’m comfortable accepting that level of volatility if it means maintaining the potential for triple-digit upside returns over the long run.
In a traditional portfolio, stocks are selected with low correlation, meaning that risk is diversified away. Not all eggs are placed into one basket. In crypto, all assets are highly correlated to bitcoin. Thus while it diversifies the bet on different technology bets, the risk isn't diversified away as it would be in a traditional portfolio. Thus we have to adapt our risk management according.
Correlation table
In traditional equities, a falling stock price often represents a buying opportunity, provided the company’s fundamentals remain strong and one’s valuation work supports a higher fair value. In other words, investors can confidently “buy the dip” when they have conviction in the firm’s long-term recovery. In crypto, however, estimating fair value is far more complex. Even with rigorous analysis and strong conviction, markets can fall significantly further than equities, sometimes by 80% or more. Continuing to buy during such drawdowns can be psychologically and financially draining.
For this reason, I apply Dollar-Cost Averaging (DCA) exclusively to Bitcoin, but only after a major correction has already occurred. Bitcoin is the only crypto asset in which I hold high conviction over the next decade.
While I believe the broader crypto ecosystem will continue to grow, it’s difficult to predict which specific projects will achieve lasting global adoption, much like trying to identify which internet companies would dominate back in the early 2000s (in hindsight, very few, such as Apple and Amazon, emerged as long-term winners).
Therefore, beyond using a macro framework to identify opportune moments to add or reduce risk, I apply a hybrid portfolio and trading approach. This framework allows me to shift between investing down the risk curve (allocating to higher-risk assets when conditions are favorable) and raising cash positions when liquidity tightens or volatility spikes.
From a portfolio management perspective, I maintain core holdings, positions designed to capture long-term structural trends, where diversification helps cushion drawdowns. From a trading perspective, I deploy tactical positions with clearly defined stop-losses, taking advantage of shorter-term opportunities without exposing the portfolio to excessive downside.
When market conditions justify rotating into altcoins or higher-beta assets, I size positions dynamically based on the asset’s volatility and the strength of the signal. Higher volatility implies smaller position sizes and tighter risk limits, while strong conviction setups allow for moderate size increases. Every trade includes a predefined exit rule, typically via stop-loss, to preserve capital and prevent small losses from compounding into large ones.
This hybrid structure combines the discipline of trading with the conviction of investing, allowing flexibility to participate in upside momentum while maintaining strict downside protection. A balance that’s critical in a market as volatile as crypto.