As cryptocurrencies reach all-time highs, a growing number of investors will enter the market. The dominance of the pioneering cryptocurrency started to decline when investors turned to altcoins.
In recent days, social trading company eToro, jointly with alternative data provider TheTie, released a report on the third quarter of 2021. They analyzed possible scenarios in which Bitcoin could replace the US dollar and become the digital gold of the new era.
The document has been on the eToro website under the heading “Inherent Value” since April 21st. The report discusses the trends dominating the market this quarter and presents the firm’s assessments on the ecosystem. The “Beyond the Hype” section says that NFTs seek to demystify the powers “of an asset existing since the Internet’s dawn.”
To start with, both companies examined the possible scenario in which Bitcoin would replace gold. The document states that this outlook is already underway given the continuous and growing interest in Bitcoin as an asset. In addition to this, there has been a development of decentralized finance (DeFi) and non-fungible tokens (NFT).
According to eToro, investors need to change the perspective that makes them value physical goods over digital ones. Guy Hirsch, CEO of eToro in the United States, commented on Bitcoin, Ether (Ethereum’s cryptocurrency), and other cryptocurrencies. He said that, as these crypto-assets regularly reach all-time highs; new investors will see their value and enter the market.”
The Possibility that Bitcoin Will Be the Digital Gold of the New Age
The eToro report also provides a broader perspective on what the scenario would look like if Bitcoin replaced gold, highlighting its price surge. According to the document, the pioneering cryptocurrency increases its realized market capitalization by 50% each year. By 2030, it would outperform gold by over USD 13.1 trillion in market capitalization and would be worth USD 2,114,385 per unit.
With this, only half of the current capitalization of gold would place Bitcoin around USD 700,000, says the text. Meanwhile, 10% would place the price between USD 150,000 and USD 170,000.
According to the report, it is incredible that Bitcoin even has a 2% market capitalization of gold, after only ten years as a financial asset. These predictions seemed implausible as 1 BTC at USD 50,000 was just a chimera.
Therefore, Bitcoin “should not depend on the complete destabilization of society to become very valuable.” Food, wages, markets, and even gold already suffer the chaos of hyperinflation. However, Bitcoin could destabilize gold in the next decade to become a modernized hard asset or “digital gold” for the new era.
The Advancement of NFTs Proves the Power of Blockchain Technology
Joshua Frank, CEO of TheTie, said that Bitcoin dominated the crypto market in the fourth quarter of 2020. He added that BTC continued its record performance in the first quarter of 2021. However, he noted that the return of altcoins and the advancement of NFTs defined the latter quarter.
The executive explained that, in the first quarter of 2021, the dominance of Bitcoin decreased significantly. The prospect of substantial returns lured retail institutional investors and crypto natives to turn to altcoins.
In addition to that, Frank said that he remains skeptical that the NFT wave will continue at the current growth rate. He also believes that market conditions are still extremely bullish for altcoins against Bitcoin. He thinks that money will continue to pour into cryptocurrencies in record amounts.
By Alexander Salazar
