Gabor Gurbacs, the director of digital assets strategies at VanEck/MVIS said that the market cap of Bitcoin could potentially double or even triple if it becomes a safe asset like gold. A safe asset like gold is something that provides gradual returns over a long period of time.
After a highly volatile year with Bitcoin prices plummeting since the beginning, there has finally been an increase. Bitcoin prices have increased and settled a little over $7000. Cryptocurrency enthusiasts are confident that Bitcoin will not fall sharply again and some financial analysts concur as well.
Returns of Bitcoin over 2017 were better than the gold and equity markets. Because of this, people have compared gold and Bitcoin, with some believing that Bitcoin will also become a store of value like gold.
Gurbacs added that a maturing cryptocurrency market could potentially drive investors away from gold. He believes that Bitcoin could replace gold in investor portfolios that comprise a mixture of gold and government bond. He believes that this will especially be true for passive investors. However, he acknowledged that cryptocurrencies including Bitcoin are in their infant stage of development and therefore very volatile. Because of this volatility, a lot of investors have resisted from including cryptocurrency in their portfolio.
Gold today has around $7 trillion outstanding. If you take, say, 5 to 10 percent, I’ll let everyone do the math about the upside of Bitcoin.
However, the cryptocurrency market still needs to mature significantly before it becomes as big as the gold market. Institutional investors are entering the crypto market and announcing crypto focused investment funds. The liquidity in crypto markets has also increased because of the increasing number of cryptocurrency exchanges. Gurbacs stated,
We believe that there is sufficient liquidity. We believe there is pricing benchmarks. We believe there is a way to integrate Bitcoin into the financial ecosystem that we are used to for ETFs, stocks, bonds and commodities.
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