Exploding Gold Sales at Pawnshops Offers Lesson for Bitcoin Bulls

In a Bloomberg article over the weekend, it was reported that a large number of customers have been flocking to a pawnshop in Brooklyn to sell their gold items, taking advantage of the recent surge in gold prices surpassing $2,400 per ounce for the first time. Gene Furman, the shop owner, shared with Bloomberg that he has seen three times the usual number of sellers since the gold rally began two months ago. Essentially, people are treating gold as an emergency source of cash they didn’t have before.

It seems that buyers are refusing to make purchases at current prices, as evidenced by the U.S. Mint reporting American Eagle gold coin sales in March that were only about 10% of the sales from the previous year.

Whither bitcoin?

Bitcoins and gold have distinct features, yet they possess several commonalities. One of these shared traits is that neither is permanently used up once extracted. For bitcoins, all mined coins still exist in the system, even if certain ones may be inaccessible due to lost private keys.

Bitcoin saw a remarkable surge of approximately 70% in value by mid-March for the year 2024, reaching an all-time high above $73,000 mainly due to heightened demand from Spot Bitcoin Exchange-Traded Funds (ETFs). However, since then, the price has dipped more than 15% below this peak. The cause of this decline is still under discussion; nevertheless, for the past month, selling pressure has outpaced a slightly decelerated but still robust buying trend from the ETFs.

With bulls estimating only around 900 new bitcoins being mined daily due to the upcoming halving event reducing it to 450, while ETF demand can reach into the thousands, the simple arithmetic may not result in an increase in numbers. The current supply of circulating bitcoin is close to 20 million. At a high price point, there are numerous sellers who are more than willing to offload their bitcoins for profit, much like those eager buyers flocking to Gene Furman’s pawnshop.

Today, one of the early Bitcoin miners from way back in 2010 transferred 50 Bitcoins, currently valued at approximately $3 million, to crypto exchange Coinbase for possible sale. This comes after last month’s transaction from an account that hadn’t been active for over a decade, involving more than 1,000 Bitcoins worth around $40 million, which went to a trading desk.

According to Tobina Kahn, president of House of Kahn Estate Jewelers, there’s been an overwhelming surge in interest regarding gold and bitcoin. She shared this with Bloomberg and expressed that her team is currently inundated with requests from clients looking to sell their jewelry pieces. Kahn advises clients to act promptly as the current market conditions are unlike anything seen before.