The Capital
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The Capital

Strengths That Will Make Bitcoin Surpass Three Billion Dollars In The Next Years

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Still Missing

According to the study, Bitcoin’s market capitalization still has plenty of room to grow from its current level (about $ 331 million) if its adoption increases in its four main facets: a global settlement system, protection against seizures, a form of digital gold and a catalyst for demonetization in emerging markets.

Global Settlement Network

Currently, Ark Invest highlights, all international payments in dollars must be settled through the Real-Time Wholesale Settlement (RTGS) of the Federal Reserve. “Bitcoin obviates the need for intermediaries to mediate and settle transactions and is capable of settling high-value transactions.”

Asset Protection

In the face of financial problems or capital confiscations that some governments have carried out, citizens are often left unprotected, the study states. With Bitcoin, on the other hand, personal sovereignty is possible.

In our opinion, a sensible allocation to bitcoin would approximate the probability that a corrupt or the wrong regime will seize assets, either through fiat money inflation or outright seizure.

Ark Invest. Bitcoin as an investment.

By allocating 5% of the fiat currency assets of emerging countries to bitcoin, the value of Bitcoin would go from $ 200 billion to $ 2.5 trillion.

New Digital Gold

In the comparison between bitcoin and gold, several advantages of bitcoin over that precious metal have been highlighted. For example, bitcoin is more efficient in terms of portability, divisibility, verification, and transferability, attributes that also protect against centralization.

Demonetization Catalyst

Regarding countries with high inflation rates or hyperinflation, Ark Invest affirms that the lack of confidence in the monetary authorities leads investors and those who want to save to seek safe haven assets such as gold or bitcoin.

Traditional Markets Correlation

There are periods in which bitcoin has maintained a high correlation with gold, for example, after the declaration of the pandemic by the WHO. However, when compared historically with the main assets of the conventional economy, the correlation remains low: between -0.2 and 0.2.

In the absence of pandemic-like shocks, we believe that the correlations between bitcoin and traditional assets will again trend toward zero, until those who allocate assets to portfolios routinely include bitcoin in portfolios and until the traditional financial system incorporates Bitcoin on your infrastructure.

Ark Invest. Bitcoin as an investment.

In just over 10 years of history, says Ark Invest, bitcoin has been the best performing asset of the 21st century. “An investment of USD 10,000 in bitcoin 5 years ago, today would produce 119% compound annual return, the equivalent of having approximately half a million dollars today,” says the study.

Maturity As Institutional Asset

With a capitalization market that exceeds 200,000 million dollars, the commercialization of bitcoin is carried out in exchanges or centralized cryptocurrency exchanges, not between banks, Ark Invest highlights.

A Good Measurement

When the daily spot volume of bitcoin is analyzed against the main traditional asset classes, it becomes clear that bitcoin is moving in an order of magnitude much lower than that of traditional equity markets.

Investment Portfolios

The study dedicates a section to the strategies for allocating bitcoin to investment portfolios, and for this, it simulated 1 million portfolios with different allocations of bitcoin.

Final Thoughts

By offering the most attractive risk-reward profiles in the market, the study notes, “it should scale from $ 200 billion today, to between $ 1 trillion and $ 5 trillion in capitalization within the next 5 to 10 years.”



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