Bitcoin Could Take Money from Gold According to Crypto Experts
Crypto experts believe that Bitcoin could take a huge chunk from gold. These comments come shortly after Bitcoin moved back above $7,000. It has led to many experts believing that it could be the sign of a new rally. In fact, some of the experts believe that Bitcoin could move beyond the reach of most people.
What Will Drive This
This move will be fueled by a growing crypto market, which might lure investors out of real gold for digital gold. This is according to Gabor Gurbacs, the director of digital asset strategies for VaEck/MVIS.
He said that gold has around $7 trillion outstanding. If someone were to take about 10 percent, this would give Bitcoin the upside. Right now, the Market cap for Bitcoin is about $128 billion. If just 10 percent of the value of gold were to move to Bitcoin, this would be more than triple the market cap for Bitcoin.
The director added that Bitcoin was used as digital gold today. Most people that purchase it use it as a de-risk asset. Essentially, if someone wanted to outlay systematic risk, they would purchase gold or Bitcoin.
What Needs To Happen
Before Bitcoin can achieve this status of digital gold, the crypto markets would need to evolve. This evolution would have to involve solutions to some of the issues that give investors jitters. For instance, there would need to be marketwide valuation and pricing. There would also need to be customer protection and compliance for major investors to start taking bitcoin seriously.
Right now, there are over 120 exchanges. At these exchanges, the price of Bitcoin often varies amongst these platforms. The VanEck/MVIS that Gurbacs works for is currently trying to address the issue of price variation using pricing benchmarks.
Gurbacs is quite confident that the crypto market will evolve and become better, just like the existing investment markets. For one, he was happy about the liquidity of the crypto markets. He added that he believed there were pricing benchmarks. Besides that, he was sure that a way to integrate the Bitcoin into the financial ecosystem would soon be found. This integration would offer solutions such as stocks, bonds, ETFs, and commodities.
The New Bitcoin Rally
In the last few days, the price of Bitcoin has shot up from around $6,000 to reach above $7,000. It is currently priced at about $7,400. However, no one is sure if the rally will continue or fade. One of the reasons why Bitcoin has shot up is that BlackRock announced they were considering investing in crypto. The company is a major asset management company.
The company has created a working group to examine ways the company could invest in the Bitcoin. It also wants to check whether the Bitcoin is a viable option for investment. They also want to check the dealings of the competition with crypto assets. However, it is not clear if this hype will be enough to sustain the price of the Bitcoin. It might fade away soon, especially if Blackrock decides they will not invest in crypto.