Bitcoin an 'Emerging Competitor' to Gold, Says CME's Chief Economist

Blu Putnam said gold's ongoing production, likely to increase this year, contrasts with bitcoin's fixed supply.

AccessTimeIconFeb 4, 2021 at 8:41 a.m. UTC
Updated Sep 14, 2021 at 12:06 p.m. UTC
10 Years of Decentralizing the Future
May 29-31, 2024 - Austin, TexasThe biggest and most established global hub for everything crypto, blockchain and Web3.Register Now

Bluford Putnam, chief economist and managing director of CME Group, believes bitcoin is an "emerging competitor" to gold.

In a CME-presented explainer video posted by Bloomberg on Wednesday, Putnam said the yellow metal's ongoing production, likely to increase 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 waning appeal as a hedge against global political risk.

"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 said.

The chief economist added that, since equities respond to the same driving force in markets around the world, the gold-equity relationship tends to become tighter, thus weakening gold's safe-haven appeal.

Disclosure

Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

CoinDesk is an award-winning media outlet that covers the cryptocurrency industry. Its journalists abide by a strict set of editorial policies. In November 2023, CoinDesk was acquired by the Bullish group, owner of Bullish, a regulated, digital assets exchange. The Bullish group is majority-owned by Block.one; both companies have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary with an editorial committee to protect journalistic independence. CoinDesk employees, including journalists, may receive options in the Bullish group as part of their compensation.


Learn more about Consensus 2024, CoinDesk's longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to consensus.coindesk.com to register and buy your pass now.