Goldman Sachs: Bitcoin Will Further Grab Market Share From Gold

A research report by investment banking giant Goldman Sachs stated that the rise of Bitcoin will reduce the market share of gold.

In a report to clients on January 4, the bank said 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."

In terms of 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. Supporters of Bitcoin—from Paul Tudor Jones to Anthony Scaramucci—all support Bitcoin as a hedge and inflation hedge similar to gold.

If Bitcoin had a 50 percent share of the so-called "store of value" market, its price could rise to more than $100000, according to Goldman Sachs. The bank added that use cases other than store of value could be a tailwind for Bitcoin. 

The report said, "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".

Goldman Sachs previously pointed out that Bitcoin is one of the best performing assets in 2021, although it underperforms relative to other assets given its volatility.

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