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• Goldman Sachs expects Bitcoin to overtake market share of gold
• Bitcoin topped the firm’s 2021 return scorecard with over 60% yearly returns, whereas gold is at the bottom with a 4% yearly loss
Bitcoin will snag away market share from gold in 2022, as the digital currency has become more widely adopted, Goldman Sachs co-head of foreign exchange strategy Zach Pandl said in a research note to clients.
Goldman estimated that the public holds gold worth around $2.6 trillion for investment purposes and compared it with Bitcoin’s market value of $700 billion.
Pandl wrote, estimating both the values of gold and the digital asset, Bitcoin currently has an approximate 20% share of the “store of value” market.
The term “store of value” describes assets that can maintain their value over time without depreciation.
The bank estimated the float-adjusted market cap of Bitcoin; however, the current market capitalization of BTC is close to $884 billion.
Forecast for Bitcoin
Bitcoin will “most likely” become considerably bigger in proportion over time, the U.S. investment bank said, in a list of 2022 predictions.
“Hypothetically, if Bitcoin’s share of the ‘store of value’ market were to rise to 50% over the next five years (with no growth in overall demand for stores of value), its price would increase to just over $100,000, for a compound annualized return of 17-18% (accounting for growth in Bitcoin supply over time),” Pandl wrote.
On Wednesday, Bitcoin was trading around $46,500 and struggled to make gains after falling sharply in early December.
Bitcoin hit an all-time high of $69,000 in November.
Despite the ups and downs, the world’s biggest cryptocurrency still managed to top Goldman Sachs’ 2021 return scorecard with over 60% yearly returns, whereas gold is at the bottom with a 4% yearly loss.
“Bitcoin may have applications beyond simply a “store of value” - and digital asset markets are much bigger than Bitcoin - but we think that comparing its market capitalization to gold can help put parameters on plausible outcomes for Bitcoin returns,” Pandl wrote.
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