Bitcoin Could 'Completely Replace Gold' As Countries Adopt It, Chamath Palihapitiya Predicts

The bitcoin price has soared back to its all-time high of around $70,000 per bitcoin, recovering from a 2022 crash that Goldman Sachs' crypto lead thinks could signal a bitcoin price "turning point."

The price of bitcoin has soared back to its all-time high of around $70,000 per bitcoin, recovering from a 2022 crash that Goldman Sachs' crypto lead thinks could signal a bitcoin price "turning point."

Now, after U.S. Treasury secretary Janet Yellen issued a serious warning over the swelling $34 trillion U.S. debt pile, former billionaire and All In podcast "bestie" Chamath Palihapitiya has predicted bitcoin could "completely replace gold" as countries adopt it—potentially pushing it's market capitalization toward gold's $15.7 trillion.

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Fears have emerged that U.S. dollar debasement could lead to the currency's collapse as the world's ... [+] reserve asset—potentially making way for bitcoin to replace gold and sparking a huge bitcoin price rally.

"There's an increasing body of countries that will become dual-currency," Palihapitiya, who claimed to have bought $1 million worth of bitcoin in 2010 when it was trading at around $80, said on the podcast he hosts along with fellow investors David Friedburg, Jason Calacanis and David Sacks.

"They will look at their local currency and they will look at bitcoin. And they will say both of these two things are needed. The first for when they're transacting on a daily basis for goods and services and the second when you need to buy a permanent asset that needs to have residual value, they'll buy bitcoin."

El Salvador made history when it adopted bitcoin as its official currency alongside the U.S. dollar in 2021 with mixed success, sparking debate whether other countries would follow suit though no major countries have yet.

However, Palihapitiya added he thinks that "there are a lot of countries that will never look at bitcoin credibly even if they support it," with the U.S. perhaps "one of those."

Palihapitiya pointed to the historical bitcoin price charts that show huge increases in the bitcoin price following so-called bitcoin halvings that reduce the supply of new bitcoin issued to miners that maintain the network. The latest bitcoin halving, its fourth which cut the daily supply of new bitcoin from around 900 to 450, happened in April.

If the bitcoin price repeats its past performance after this halving, it could soar to almost $500,000 by October 2025.

"If you apply these averages, they're by no means [bitcoin price] predictions, they're just guesses, you start to see what could happen if you take the average of the last few cycles," Palihapitiya said. "The average of cycle two and three is some really meaningful appreciation."

Historical bitcoin price data shows that after previous bitcoin halvings, the bitcoin price peaked around 18 months after the supply cut.

"If this thing gets to these levels of appreciation, it's going to completely replace gold and become something that has transactional utility for hard assets," Palihapitiya said. "If you marry that with this fear that some folks have about dollar debasement, you start to see some interesting opportunities."

06/03 update: The Federal Reserve Bank of New York has written a report outlining the narratives around "declining dollar shares in official reserves, and increasing roles for gold holdings by central banks," which is says has been "inappropriately" generalized beyond "the actions of a small group of countries."

The report authors found global central banks and finance ministries held nearly $12 trillion of foreign exchange reserves as of the end of 2023, with nearly $7 trillion composed of U.S. dollar assets. World Gold Council data shows "global central banks purchased over 1,100 tons of gold in 2022—more than double the purchase amounts of the previous year—and maintained a similar purchase level in 2023," according to the report.

"The Fed now admits some countries are moving to gold," tech investor and former Coinbase chief technology officer Balaji Srinivasan posted to X, pointing to what the Fed says is a "small group" that "represents 3 billion people. So 37.5% of the world is moving away from dollars towards gold."

Earlier this year, Bank of America analysts warned the U.S. debt load is about to ramp up to