Had a discussion with my friends yesterday. 

Instead of labelling bitcoin as "digital gold", on a personal note, I will label bitcoin as "digital diamond".

The rationale is as below:

1. Co-relation to risk assets.

In general, diamond prices share co-relation to broad economy as well as stock prices. Meanwhile, gold prices has negative co-relation to risk assets. When times are bad, gold prices goes up. When times are good diamond, stock and bitcoin prices goes up. Hence the label as digital gold, becomes confusing. 

2. Manipulation of pricing by marketing/speculation 

Gold prices in general, reflects demand and supply. 

Diamond demand is another story all together, when we look at history of manipulation of diamond prices by diamond Jewelry industry. The marketing gimmicks of "diamond lasts forever", "wedding diamonds should cost X times of monthly salary", are all marketing gimmicks which worked. 

Bitcoin is in similar condition. Bitcoin prices are influenced by people shouting, "Bitcoin will reach $XXX by XXX".

Speculation is prevalent, those who are marketing bitcoin, they themselves stand to gain. 

Could Bitcoin in long run, establish a similar pricing mechanism as diamond industry? 

It seems likely to me. But doesn't seem like will mirror gold. 

3. Finite supply Through mining

Bitcoin supposedly has finite supply and grows through "digital mining".

It's similar as both gold and diamonds. Easy deposits would have been extracted. More difficult deposits will take more time and cost to extract. 

4. Alternatives in market

When we talk about gold, what alternative is there? Fake gold? Gold ver 2.0? There isn't a viable alternative that's really like gold except for little brother silver, which do not even look or behave In similar way, from material point of view.

However, when it comes to diamonds, there's various types of lab grown diamonds which serves as real alternatives.

For bitcoin, there are various types of cryptocurrency like etherum, solana etc that attempts to be alternative to Bitcoin. Although there are various forms of arguments arguing whether they are valid alternatives or not, but they do fall under the cryptocurrency pool. 

As bitcoin markets mature, from my own pov, there could be high probability that Bitcoin will eventually behave more like diamond pricing, as long as there is valid use cases. 

Speculation can push up markets like the story on can use bitcoin to hedge drop in value in usd, which is the current situation, together with increased speculation that with lesser regulation, bitcoin prices will go up.

Short term, prices could still have some upside but it's Unlikely to break previous high as it will still be co-related to risk assets. Risk to downside could be higher instead. 

The question that I am asking myself is, when recession hits, if it hits, will people buy or sell bitcoin?