Bitcoin is ready to take space away from gold as a store of value: Goldman Sachs

2 weeks ago 8
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Key facts:

Bitcoin may have applications beyond a simple store of value, Goldman Sachs acknowledges.

The bank estimates that the adoption and demand for BTC will continue to grow.

Bitcoin (BTC) is unavoidable and the facts prove it. The US investment bank, Goldman Sachs, points out that the leading cryptocurrency in the market will continue to subtract spaces from gold and, in addition, predicts a price of USD 100,000 for BTC in the next five years, if it increases its share in the reserve market of value.

In a note from Zach Pandl quoted by Bloomberg, who is the co-head of global strategy for currencies and emerging markets, the bank, which has already had a friendly attitude towards the emerging ecosystem and more precisely with Bitcoin, states that market capitalization, adjusted by the float of BTC, is just under $ 700 billion in the store of value market.

This, they indicate, represents 20% of the market share of store of value, made up of BTC and gold. The latter, an asset of preference for long-term savers and investors, It currently has a market capitalization of USD 2.6 trillion, on average.

Thus, and if BTC’s participation in the reserves market “hypothetically” grew, as they point out, by 50% during the next five years, the price of the digital currency will be over USD 100,000, for an annualized compound return of 17% or 18%.

According to Goldman Sachs, the cryptocurrency market capitalization can grow as a by-product of wider adoption of digital assets, “And possibly due to Bitcoin-specific scaling solutions.”

“Bitcoin may have applications beyond a simple store of value, and the markets for digital assets are much larger than Bitcoin, but we believe that comparing its market capitalization to gold can help to establish parameters on plausible outcomes for the returns of Bitcoin ”.

Goldman Sachs, investment bank.

The Goldman Sachs comments come as BTC is trading above $ 46,000, according to the CryptoNews Price Calculator.

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The bank, which noted that bitcoin was one of the best performing assets during the recently ended 2021, clarifies that demand will continue to grow, even with the challenge that the consumption of real network resources can pose for business or institutional adoption.

Bitcoin accounts for 20% of the store of value market share. Source: Bloomberg.

Digital gold

The narrative of BTC as digital gold has been around and has been around for a while now, so it is not uncommon for Goldman Sachs to differentiate between the two assets.

Last year, according to what we have reported in CryptoNews, many were the comments that compared the market leading cryptocurrency with the precious metal.

A report from the cryptocurrency broker, eToro, let it be known that Bitcoin will become the digital gold of the new age. In the paper, they noted that if BTC increases its realized market capitalization by 50% each year through 2030, it would outperform gold with more than USD 13.1 trillion in capitalization and would be worth USD 2,114,385 per unit.

And in the same vein, the CEO of Visa, Alfred Kelly, described bitcoin as digital gold, in the sense that it is a speculative asset. In addition, he said that the company he heads works to facilitate the purchase of this cryptocurrency and its use as a means of payment through cards.

Bitcoin is trading this Wednesday, January 5, above $ 46,600. Source: CoinMarketCap.

Bitcoin, “a pure cryptocurrency”

The Goldman Sachs note highlights the acceptance of Bitcoin by Goldman Sachs. In fact, this same week, CriptoNoticias reported a report from that institution, where it classified BTC, among other things, as a “pure cryptocurrency.”

In its report “Overview of Digital Assets”, the bank points out that bitcoin has a great utility in the immediate. For the entity, there has been an evolution of the BTC narrative as a digital store of value driven by scarcity, security and brand equity.

According to the institution, BTC is “especially useful in countries with unstable currencies”, such as Venezuela or Argentina, where adoption has been driven by inflation.

In the same narrative, that bank joined a few months ago with the financial services and investments in cryptocurrency company, Galaxy Digital, to provide liquidity in bitcoin futures operations to the clients of the financial institution, fact registered hereby.

Surpassing gold as a reserve asset is, apparently, a new goal set for bitcoin. It can be fulfilled, although the massive adoption of the asset would also have to be specified. The good thing is that progress is already being made in that and positively.

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