Bullish cryptocurrency advocates have long supported bitcoin as a modern alternative to gold, and in some ways the new market is close to achieving the major milestone of surpassing gold in this regard.
On Tuesday (18), Bernstein Advisors (Bernstein) released a new report saying that the total value of the cryptocurrency market is now more than $2 trillion, nearly equal to the amount of gold held for private investment purposes.
“Investors need to find return streams that hedge against the risk of devaluation and diversify equity exposure at higher levels of inflation. These assets (cryptocurrencies) may have the potential to serve this function,” the firm said in a report to clients.
Backed by corporate and institutional players, cryptocurrencies have gone mainstream, with investors increasingly viewing digital currencies as a reliable store of value and a way to diversify their portfolios. Bitcoin, the largest cryptocurrency, was trading at about $43,300,000 on Tuesday and has a market capitalization of about $800 billion, according to Coin Metrics.
But Bernstein is quick to point out that both gold and digital currencies have other uses. According to Bernstein’s calculations, if you include gold jewelry, the market for the precious metal is worth nearly $8 trillion, about four times the market for cryptocurrencies.
In addition, there are important differences between cryptocurrencies. Bernstein said bitcoin is primarily used for value storage, while other digital currencies such as ethereum may also function as more than just an investment.
Bernstein’s comments echo the sentiments of some large fund managers, who note that the ease of trading bitcoin may make it more attractive than gold as a safe-haven asset and a hedge against inflation.
Bill Miller, founder and chief investment officer of Miller Value Partners, noted back in April that “it’s easy to transport, it can be sent anywhere in the world if you have a smartphone, so it’s much better than gold as a means of preserving value.”
For his part, Rick Rieder, chief investment officer of global fixed income at BlackRock, noted that “Bitcoin is much more functional than passing gold bullion around.”
Nonetheless, Bitcoin’s long-term viability remains in question, including from a regulatory and environmental perspective. Bitcoin prices fell last week after Tesla CEO Elon Musk said the company would suspend accepting bitcoin as a form of payment for vehicles due to “the rapid increase in fossil fuels used for bitcoin mining.”
Looking ahead, Bernstein’s Harshita Rawat said bitcoin could replace gold once some regulatory and environmental issues are resolved.
She noted:- “Bitcoin can be more easily used as a store of value anywhere in the world (especially in countries where fiat currencies are unstable) and is very liquid.” She noted that the cryptocurrency has a 24*7 network and can be traded almost instantly. “The impact as a store of value, especially in certain countries/regimes, is significant.”
She said Bitcoin and cryptocurrencies in general have “reached a tipping point” in terms of “institutional/retail adoption, dollar investment, industry talent and liquidity.”
Still, Rawat’s colleague Inigo Fraser-Jenkins isn’t sure how investors will view bitcoin in the long run. He cites the 5,000-year history of gold, while investors didn’t think bitcoin could hold its value until recently.
He believes it will take many years for Bitcoin to build broad enough trust to make it a truly secure asset. “There are very broad economic, legal and cultural issues involved here. Any claim that these issues can be overcome in a short period of time seems difficult to accept because of their deeply social nature.”
Posted by:CoinYuppie，Reprinted with attribution to:https://coinyuppie.com/cryptocurrency-reaches-major-milestone-in-this-regard-the-market-value-is-on-par-with-the-value-of-gold/
Coinyuppie is an open information publishing platform, all information provided is not related to the views and positions of coinyuppie, and does not constitute any investment and financial advice. Users are expected to carefully screen and prevent risks.