ZeroHedge Edit- Bitcoin Cracks $100,000 and BCA's $200k "Network Effect"

It's All Perception Now

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While we should expect a near-term retracement, bitcoin’s structural uptrend is intact with an ultimate destination of $200,000+

-BCA Research

INTRO:

Authored by GoldFix,ZH Edit

Bitcoin has breached $100,000 today as anticipated in the ZeroHedge Premium report BCA: Bitcoin Closes In On $100,000 which included a description of BCA's rationale for Bitcoin's continued ascendency to $200,000.

Bitcoin's Path to $200,000

A firm called BCA had made some small waves with an recent analysis comparing Bitcoin and gold. Back in January, they released a report breaking down Bitcoin's value relative to gold, which we analyzed in a three-part series. Fast forward to November, and BCA revisited their thesis, doubling down on why Bitcoin could surpass gold in value.

Their reports have been circulating in niche financial circles, but with a recent Zero Hedge article covering it, expect the mainstream to pick it up soon. If you’re long Bitcoin, skeptical, or simply curious about its relationship with gold, this conversation is for you. Here’s a comprehensive breakdown.

The Bitcoin-Gold Non-Confiscatability Comparison

BCA’s report argued that Bitcoin’s intrinsic value lies in its non-confiscatability. They define this as Bitcoin’s immunity to state control, whether through monetary inflation, bank failure, or outright expropriation.Here are the three main points of their analysis.

Part 1: Intrinsic Value Through Non-Confiscatability

BCA’s January report argued that Bitcoin’s intrinsic value lies in its non-confiscatability like that of Gold. They define this as Bitcoin’s immunity to state control, whether through monetary inflation, bank failure, or outright expropriation.

For comparison from our analysis

• Monetary Inflation: Inflation erodes fiat value but leaves gold and Bitcoin untouched.

• Banking Failures: Gold stored outside banks and Bitcoin in self-custody are immune to collapses.

• Expropriation: Governments can recall gold (e.g., 1933 U.S. gold confiscation), but Bitcoin, secured by private keys, is harder to seize.

This framework builds on the notion that Bitcoin, like gold, functions as a hedge against state overreach. However, Bitcoin’s digital nature arguably makes it even less susceptible to confiscation than gold.

Part 2: The Confiscatability Comparison

Their second point elaborated on the comparative resilience of gold and Bitcoin: Both are impervious to inflation and financial crises if held outside centralized systems. Gold can be physically confiscated by governments. Bitcoin, on the other hand, requires user cooperation to be seized, adding a layer of protection. While the argument is compelling, critics highlight Bitcoin’s potential vulnerability to state control through regulation or infrastructure throttling (e.g., restricting its use or banning exchanges).

Part 3: Bitcoin as the Future of the $15 Trillion Non-Confiscatable Market

BCA’s boldest claim came in our third installment: Bitcoin is poised to displace gold in the $15 trillion market for non-confiscatable assets. Their reasoning: The bulk of gold’s $19 trillion market value comes from its role as a store of value in the non-confiscatable asset space. With a market value of $1.5 trillion, Bitcoin occupies less than 10% of this market, suggesting room for growth.

BCA’s projection that Bitcoin could capture significant market share from gold is correct, But as we shall see next; Their reason for this has shifted slightly from their belief in Bitcoin's non-confiscatabiltiy to the public's increased acceptance of that belief in non-confiscatabilty. In essence, they note the growing network effect as key in taking further market-share from Gold This is a slightly different, but equally compelling reason in a "free" market-based world.

The November Update: Path to $200,000?

In November, BCA revisited their thesis with a report suggesting Bitcoin’s value could hit $200,000, calling $100,000 a possible pit stop. Their addition of network effects was key.

From that report:

First, given that gold’s above-ground market value is $19 trillion, the majority, around $17 trillion comes from the network of holders who value gold for its non-confiscatability.

Second, just like gold, bitcoin cannot be confiscated by monetary inflation or banking system failure (Chart 4). Additionally, and unlike gold, it is difficult for the state to confiscate it by outright expropriation. Yet bitcoin, with a market value of $1.5 trillion comprises less than 10 percent of the total market for non-confiscatable assets. As bitcoin’s share of this market increases, and the supply of bitcoins reaches its upper limit, bitcoin’s price has substantial upside.

Network Effects: The Power of Adoption

BCA’s updated stance highlights that Bitcoin’s true strength lies not just in its non-confiscatability but in its growing network. The “network effect” refers to the increasing utility of an asset as more people adopt it:

• The first telephone was useless, but the last telephone is indispensable because everyone else has one.

• Bitcoin’s network of users makes it harder to ignore, just as gold’s global holders ensure its value as a store of wealth.

This shift reframes Bitcoin’s value proposition in a sensible way. It’s no longer just about its resistance to confiscation but about the collective agreement that it’s a valuable and functional asset.

While Bitcoin’s network effect is growing, gold’s network remains robust. Its long-standing role as a monetary and cultural anchor gives it an edge. But as younger generations adopt Bitcoin for its digital convenience, the balance may shift. BCA’s reports suggest that Bitcoin isn’t just competing with gold; it’s complementing it. For many, owning both offers a hedge against traditional financial systems and a bet on technological evolution.

• For Bitcoin Holders: The idea that Bitcoin could carve out a larger share of the $15 trillion non-confiscatable market is compelling, but regulatory risks and usability challenges remain.

• For Gold Investors: Gold’s resilience as a physical asset with a deep historical foundation makes it indispensable, even in a world of digital disruption.

• For Both: Diversification remains key. Each asset has unique strengths, and holding both could balance risk and reward.

Whether you’re a gold maximalist, a Bitcoin enthusiast, or a skeptic, BCA’s analysis offers insights worth considering:

What is the difference between This and a Ponzi scheme?

BCA anticipates this concern saying: You might ask, what is the difference between a network effect based on collective belief and a Ponzi Scheme? The answer is that a Ponzi Scheme relies on an exponential growth of its November 14, 2024 For gold, this means that if global wealth rose by say, 20 percent in the coming 2-3 years and the global wealth share held in the network on a promise to get-rich-quick. Once that exponential growth ends, as it must, the value of the network collapses"

The question remains then, Why are people buying it overall?

The Bottom Line: Network Effects Drive the Future if You Believe

Ultimately, BCA’s analysis boils down to one concept: the network effect. Whether it’s gold, Bitcoin, or fiat currencies, value increasingly depends on adoption and usability. As more people buy into Bitcoin’s narrative, its market share may grow.. The future isn’t about gold versus Bitcoin. It’s about understanding if and how each fits into a world reshaped by technology, regulation, and shifting economic power. For now, the conversation continues, and the market decides if belief is well-founded or not.

Continues here

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