Goldman Sachs predicts the future of Bitcoin
Bitcoin since its inception has been referred to as “digital gold”. The same criticisms made concerning gold have also been levied on Bitcoin since it pays no interest or dividends, neither does it imitate the performance of traditional assets. Advocates say that Bitcoin like gold serves as protection against systemic abuse of fiat currencies. There have been predictions made about the future of Bitcoin as a result of its rapid dominance in the digital world. The most recent prediction is that of Goldman Sachs. In this article, we will be unveiling what these predictions are and how they will affect the crypto market in the years to come.
What is the Goldman Sachs group?
Goldman Sachs Group Inc. is a leading global investment banking, securities, and investment management firm that provides a wide range of financial services to a substantial and diversified client base that also includes corporations, financial institutions, governments, and individuals. The firm was founded in 1989 and is headquartered in New York and also has offices in major financial centers around the world.
As a result of bitcoin and cryptocurrency’s price escalation this year, Wall Street has taken interest in it. According to the crypto market analysis, Bitcoin over the last twelve months increased by 300% which however did not match up to that of Ethereum which is at 800M. As crypto enthusiasts try to forecast what will become of digital currencies and Bitcoin, in particular, Wall Street giants like Goldman Sachs have predicted that Ethereum has the possibility of surpassing Bitcoin in subsequent years.
Increasing to over $100.000
More so, about bitcoin’s future, Goldman Sachs estimates that Bitcoin will continue to take its market share from gold. According to the float-adjusted market capitalization, Bitcoin is just under $700 billion. From this estimation, 20M accounts for the “store of value’ which comprises Bitcoin and gold. The value of gold available for investment is estimated at $2.6 trillion. Assuming that the bitcoins share of the store of value increases to 50% over the next five years, its price would increase to over $100.000. This leaves Bitcoin with an annualized return of 17% or 18%. For comparison, the capitalization of gold is estimated at around $11,553 billion. At its peak, BTC reached a market cap of $1,291 billion at its previous record price last November.
Still, on the issue of Bitcoin prediction, Sachs forecasts that Ethereum could be higher than Bitcoin in a few years. For the past twelve months, Ethereum has been seen as a flurry of activity as a great number of non-fungible tokens and decentralized finance rushed to build on Ethereum’s blockchain. Goldman Sachs researchers wrote that ethereum currently looks like the cryptocurrency with the highest real use potential because it is the platform on which native digital currencies build on. Also, it is the most popular platform for smart contracts.
To conclude, these predictions only confirm once again that Bitcoin is now firmly established in its role as “digital gold”. Gold is seen as a defensive inflation hedge and crypto as a risk-on inflation hedge. On this note, we can only but anticipate the market reaction to these predictions. Will these predictions take a toll on the current crypto market?
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