Crypto or gold?
Gold has historically been a long-term asset that has been used to protect against market downturns. Bitcoin is still a new and unproven investment, but cryptocurrency speculators are utilizing it to hold assets and protect themselves against market declines and recessions.
Cryptocurrency markets remain volatile, but following the outbreak, they began to resemble traditional investments more closely.
Bitcoin’s value as a gold rival, according to Goldman Sachs, might reach $100,000. “Bitcoin may have benefits beyond simply serving as a “store of wealth” – and digital asset markets are considerably larger than Bitcoin – but we believe that comparing its market capitalization to gold might help put constraints on probable Bitcoin returns,” writes Zach Pandl, a Goldman Sachs economist. According to him, bitcoin now accounts for 20% of the ‘store of value’ market, with a stock of bitcoin accessible for investment valued at roughly $700 billion, compared to $2.6 trillion in gold held as an investment.
In a hypothetical scenario, Pandl calculated that bitcoin’s price would hit $100,000 if it gained 50% of the store of value market.
The term “store of value” refers to assets that retain their value throughout time without deteriorating, such as precious metals and some currencies.
Goldman Sachs reported in January 2022 that bitcoin had a 20% share of the “store of value” market, citing the cryptocurrency’s $700 billion market capitalization vs the $2.6 trillion worth of gold held as an investment.
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