Bitcoin is set to take further market share from gold, according to Goldman Sachs

Capital Markets • January 4, 2022, 4:31PM EST
UPDATED: January 6, 2022, 4:06AM EST
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Bitcoin's ascent will cost gold market share, according to a research report by investment banking giant Goldman Sachs. 

In a note to clients dated January 4, the bank said that the market capitalization of the largest cryptocurrency will likely grow as "a byproduct of broader adoption of digital assets, and possibly due to Bitcoin-specific scaling solutions."

Looking at bitcoin's float-adjusted market capitalization, the cryptocurrency accounts for about 20% of the total "store of value" market, which is currently dominated by gold. Proponents of bitcoin—ranging from Paul Tudor Jones to Anthony Scaramucci—have backed bitcoin as a store of value and inflation hedge asset akin to gold. 

According to Goldman Sachs, the price of bitcoin could possibly increase to more than $100,000 if it were to command 50% of the so-called "store of value" market. The bank added that use-cases outside of store of value could serve as a tailwind for the crypto. 

"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," the bank said. 

Goldman previously noted that bitcoin was among the best performing assets of the year in 2021, despite underperforming relative to other assets considering its volatility. 

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AUTHOR

Frank Chaparro profile picture Frank Chaparro

Frank Chaparro is Host of The Scoop podcast and Director of Special Projects. He also writes a biweekly newsletter. Chaparro started his career at Business Insider, where he specialized in the intersection of digital assets and Wall Street, market structure, and financial technology. Soon after joining Business Insider out of Fordham University, Chaparro was interviewing top finance and tech executives, including billionaire Mark Cuban, “Flash Boys” star Brad Katsuyama, Cboe Global Markets CEO Ed Tilly, and New York Stock Exchange President Tom Farley. In 2018, he become a sought after reporter in the crypto world, interviewing luminaries such as Tyler Winklevoss, the cofounder of Gemini, Jeremy Allaire, the CEO of Circle, and Fundstrat head Tom Lee. For inquiries or tips, email [email protected].

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