Daily Trading Volume In Bitcoin Surpasses GLD

Tyler Durden's picture

Several weeks after Goldman's chief technician started covering bitcoin, overnight Bank of America has released what some may call an "initiating coverage" report on bitcoin which notes that while the cryptocurrency remains very volatile and risky, bitcoin has experienced a spectacular surge in liquidity in the last six months. However, BofA remains stumped when it comes to making any official forecasts BofA's commodity strategist Francisco Blanch writes that bitcoin is uncorrelated to any financial asset, "so there is no way to explain let alone predict returns."

While we will present some of the more notable findings from the report shortly, one observation caught our attention, namely that in at least one regard, bitcoin has already surpassed gold: the total daily trading bolume for bitcoin has now surpassed that of the biggest gold ETF, the GLD.

As BofA notes, "it is hard to ignore that trading volumes for major digital currencies like bitcoin and ethereum have skyrocketed in recent years. For example, daily trading volumes for bitcoin were $400mn in 2012 and have now moved up to about $2bn a day at present" which also means that - at current BTC prices - the total ADV of BTC traded is higher than that of GLD.

BofA continues:

Meanwhile, ethereum had daily trading volumes of $1.5mn when it first launched in 2015 and it is now experiencing daily trading of about $1bn. Most importantly, for a digital token to become a currency, it must build to a certain scale, a bit like the silver mine in Bolivia found by the Spanish. In some ways, this is exactly what has been happening in recent quarters, with the total market value of digital tokens growing exponentially from $1.5bn to around $87bn at present.

And while Bitcoin liquidity still has a ways to go before catching up to equity and fixed income markets, BofA does note that there is a distinct overlap in the historical price pattern of gold with that of bitcoin:

A big uncertainty facing bitcoin and other digital tokens we see is their expected real rate of return. So far, early adopters have enjoyed a sharp appreciation in prices. While bitcoin seems to have followed a pattern similar to gold over a much more compressed time period (Chart 18), there is no certainty that that will continue and, most certainly, no way to predict it. Also, there are large inherent risks to digital tokens such as fraud, hacking, outright theft, new protocol adoption, limited acceptance, and it is not legal tender in many places in the world.

As Blanch summarizes, "put differently, cryptocurrencies have built scale rapidly and are now accepted as a means of payment by some corporations and individuals."

The only question is if, and when, will cryptos in their current iteration start being accepted by central banks, and more importantly, as pledgeable collateral. More on that shortly.

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NugginFuts's picture

Still won't buy it. 

BaBaBouy's picture

Trading The Thin Air ...

I guess the Vacuum Tubers like it...

BLOTTO's picture

The problem is we are fucked either which way...

eclectic syncretist's picture

Bitcoin and GLD; two ephemeral eidolons symbolizing much, but meaning nothing.

ebworthen's picture

Another sign it is a speculative bubble.

It's a nice idea, a great dream; like South Seas Shares and Black Tulips.

tmosley's picture

You don't have to buy. You just have to bear witness.

debtor of last resort's picture

Give me real money for my labour, not some early adopters pyramid scheme.

tmosley's picture

Crypto is real money. Doesn't matter how much that statement rankles your jim-jams. It's a fact.

It's also a fact that it is in the exponentially rising portion of the adoption s-curve. If you choose not to redirect the purchasing power of the world into your wallet, that is up to you.

Sanity Bear's picture

Real money doesn't become useless when the electricity goes out.

tmosley's picture

That is not a defining feature of money.

tmosley's picture

To expound, goldmoney.com's service becomes similarly unusable without electricity. That doesn't make the gold in their vaults not-money.

Sanity Bear's picture

It makes what you think is a claim on their gold in their vaults not-money.

In Stasis's picture

It actually is a defining feature of money:

"Durability - The medium of exchange must not weather, fall apart, or become unusable. It must be able to stand the test of time."

Electricity disappears and cryptos can't be traded. If key servers break then cryptos can't be traded.

It also doesn't meet the requirements for intrinsic value:

"Intrinsically Valuable- should be valuable in of itself, and its value should be totally independent of any other object. Essentially, the item must be rare."

Cryptos are dependent upon IT infrastructure and a power grid, therefore they are NOT independent. In terms of rarity, anyone can create a crypto currency which has no intrinsic value, but is "worth" something in fiat money because stupid people are willing to buy it.

toknormal's picture

Yes is does because there's nothing left to buy that you can't get using duck eggs as "real money".

Bill of Rights's picture

My solar provides plenty of electricity...the electric company pays me..

Mementoil's picture

Please define "real money".

Bill of Rights's picture

" Real money " is skills and the ability to live off the land and the resources you have. That my idea of real money.

Sanity Bear's picture

"Real money" is something that women will fuck for.

You may think I'm kidding, but go ahead and apply this rule and you may be surprised at just how accurate the results are.

tmosley's picture

That's a good indicator, though perhaps not a 100% correlation.

That said: https://news.bitcoin.com/backpage-effect-sex-industry-thrives-bitcoin/

BLOTTO's picture

Real money is fake.
.
Its the root of all evil.

Bill of Rights's picture

Ive been married for 30 years to the same women I own 7 cars, two water front homes, four grand kids and I retired at 42 ( 50 now )...All that trading daily, tho like any man I enjoy getting laid its not on the high propity list these days lol. But I get your drift.....Playa :)

Mementoil's picture

With all my appreciation to the skills you have mentioned, I don't think they constitute money.
I would define money as "a useful commodity which is also widely accepted as a medium of exchange".

tmosley's picture

1. General Acceptability-the dollar wins big, but crypto is making gains. Gold pulling up the rear.

2. Portability-crypto wins HUGE

3. Indestructibility or Durability-Gold and crypto are both indestructable in any practical sense--crypto requires an event that destroys the internet (which would have to destroy the world, realistically) to be destroyed, while gold needs a particle accelerator or has to be dropped into the heart of a star

4. Homogeneity/fungibility-gold, crypto, and dollars all tie here

5. Divisibility- gold is technically more divisible for now, but crypto is easier to divide. You don't need change for crypto transactions, so they beat cash, but are in line with digital dollar transactions.

6. Malleability-crypto wins big, with gold a distant second

7. Cognizability-dollars win big, quasi-tie between gold and crypto, as most people couldn't really tell you if a coin was actually gold or not where it is easy to identify a cryptocurrency, even if most people don't know much about them yet.

8. Stability of Value-Gold wins big, but crypto will stabilize once adoption levels off, at whichever level you think that will happen

9. No Damage to the Economy from Hoarding-my own addition. Gold loses to crypto and dollars as it has use in industry, but the difference isn't tremendous. This is the same reason why silver would be very bad as money today--it would destroy many industries thanks to the tremendous increase in cost that would come with hoarding as money.

In my judgement, crypto has surpassed gold in most aspects, and better, since it can be changed in order to meet market demands, whether through modification of the algorithm (with the implicit endorsement of the market) or via market selection of a crypto with better characteristics. Areas where the dollars exceed seem likely to not be the case for much longer, where areas where cryptos are deficient (stability) are likely to see huge improvements as they are fully adopted.

Mementoil's picture

The properties you have described are indeed the hallmarks of a good money.
But for some reason you have left out the one which I consider to be the most important - according to my definition real money has to have intrinsic value. In other words, it has to be a useful commodity regardless of it's role as a medium of exchange.
Both Dollars and Crypto-currencies don't meet this vital condition, and so I don't reagrd them as "real money".

tmosley's picture

> according to my definition real money has to have intrinsic value

Your definition is wrong.

Gold doesn't have value because it is good for coating stereo connectors. Industrial uses for gold are few and far between--negligible in the amount of mine production that they take up. The vast majority goes to jewelry and other forms of hoarding, like real money should.

The problem with dollars is that they cost less to issue than they are worth, and as such the supply and hence value of their unit is determined entirely by the discipline of the issuing authority. This is not the case with cryptos, which tend to cost about as much to mine as they are worth. This is a concept related to intrinsic value, but not exactly the same.

Mementoil's picture

My brother got married recently.
He and his wife have no interest in economics and don't give a damn about wealth preservation. And yet he has bought her a gold ring (with a worthless diamond stuck in the middle).
The industrial demand for gold is far from negligible, and including jewelry consists over 60% of the yearly production.
This demand gives the precious metal a price "floor". Even if investors lose interest in them completely, their price will not go to zero.
And in an environment of uncertainty this assurance is very important.
This is exactly why the monetary use of gold has persisted for so long, and this is why I am convinced it will continue for centuries to come.

T-NUTZ's picture

10.  Non-Manipulateability-  Central banks will never call it money if they can't put a boot on it's neck.   Gold and USD are huge losers here, making the proof of work cryptos the clear winner overall.

NugginFuts's picture

Dude, seriously, how do you even BUY BTC without USD/euro/Yuan/etc? And you think Central Banks have no way to influence them? They can spontaneously create the billions of dollars necessary both to buy and destroy any crypto currency out there in a matter of minutes. The fact that they haven't done so (yet) is an act of mercy. Just wait until they either A) find a reason to or B) get desperate enough to destroy all competition.

In Stasis's picture

Are we talking Gold physical or Gold paper, because there's a big difference there? Stackers know that Gold and Silver have intrinsic value in of themselves, meaning that we don't care about what the price of GLD and SLV are with fake fiat money. The value of physical is apparent, as it has been apparent for the last 5000 years.

And as for cryptos not being subjected to manipulation, don't make me laugh. You buy and sell cryptos with fiat money which is fake, therefore cryptos are based upon a fiat money system. All that needs to happen to move the crypto market is to print more fiat and use it to buy cryptos. 

debtor of last resort's picture

Yeah, like, here you go, have some bits and bytes and shut up.

Silver Savior's picture

So you enjoy the whole sheeple scene? By not buying gold you are letting the elite dupe you with their phoney money.

NugginFuts's picture

You mistake. I buy gold/silver/tangible assets. Not BTC, ethereum, etc.

Silver Savior's picture

Oh sorry my bad. It just looked that way in the post. My apologies.

JuliaS's picture

Gold, fiat, bitcoin = rock, paper, scissors.

Bill of Rights's picture

I like BTC volatility moves, up $300 down $200....unlike Gold which can be boring to trade at times...I know I know insurance...yes I own it...

T-NUTZ's picture

You dont know much about gold.   Gold is a dragon.   For now it sleeps.   One day you will understand me.

Alchemedes's picture

Ridiculous.

"The only question is if, and when, will cryptos in their current iteration start being accepted by central banks, and more importantly, as pledgeable collateral."

 

“What is money? Gold is money. Everything else is credit!"  - James Pierpont Morgan.

tmosley's picture

Sort of like asking "when will dinosaurs accept the blast waves from meteroite impacts?"

They don't have a choice, and they won't exist after its widespread adoption.

This is anarcho-capitalism changing your world for the better, permanently.

Mementoil's picture

The governments of the world haven't reacted yet to the emergence of crypto-currencies, and are most likely to try to fight them if they become a serious alternative to their currencies. Aren't you declaring a victory for Cryptos a little prematurely?

tmosley's picture

>The governments of the world haven't reacted yet to the emergence of crypto-currencies

You should do some research on this before you spread ignorance. Numerous governments have moved to ban and regulate cryptos. They have been universally unsuccessful in doing so.

Mementoil's picture

come on, we both know that the governments of the world haven't taken out their big guns yet.
No major government has attempted to outlaw the use of crypto-currencies, arrest the owners of a major exchange or prosecute the users, and we both know this is down the line, if they feel threatened enough.

tmosley's picture

You haven't done much research. Russia did exactly that.

The only places where it really remains illegal that I know of offhand are those filled to the brim with poor people who don't even have computers. IE shitholes like Bolivia. Anywhere where people start using it, it takes off, and governments just look like fools trying to command the tides by banning it.

Mementoil's picture

I don't consider Russia to be a "major government" when it comes to financial warfare. When the US or EU central banks decide it is time to take down cryptos, then the battle will begin in ernest. By the way, I am not rooting for crypto-currencies to lose this war. I am a Libertarian after all.

By the way - wasn't Vladimir Putin the one who recently met with the founder of Etherium, in order to discuss the possibility of creating an official Russian crypto-currency?

NugginFuts's picture

They will either kill it or co-opt it. All of this is to say nothing of CBs, which can "print" their way into billions of dollars of BTC right before pulling the plug and watching it come crashing down. BTC is measured in terms of value in government controlled currencies. 

Think about that for a second. 

Mementoil's picture

Yes, but to be honest we measure the price of gold in Dollars of Euros as well.
We can't help doing that, because we are still trapped inside the paper paradigm.
If the SHTF we might start measuring gold and BTC in loaves of bread, but in the meanwhile...

GlassHouse101's picture

BTC has outpaced trade volume of REAL Gold for a long time. The paper Gold market (GLD) isn't reality.

GlassHouse101's picture

& people preferring a candy bar over a gold coin.