Bitcoin has had an eventful few weeks with the digital asset spiking by more than 200 percent after which it fell into the bear’s realm. This was again followed by the cryptocurrency recovering to trade above the $12,000 mark again.
Despite the cryptocurrency’s fluctuations, many of its proponents were still of the opinion that Bitcoin would become the global standard for trade and finance. This sentiment was shared by Anthony Pompliano, the Chief Executive Officer [CEO] of Morgan Creek Digital Capital, who tweeted:
“Bitcoin will become the global reserve currency.
That is why we are all here.
Anything short of this becomes much less interesting.”
The standard argument made for Bitcoin was about the nascent stage of the digital asset, its time period still significantly less when compared to mainstream assets like gold, funds and real estate. The entire cryptocurrency market as a whole amounts to approximately $200 billion, a minuscule figure compared to the gargantuan trillions possessed by other industries.
Gold, Bitcoin’s biggest rival, holds a global value of $7.5 trillion and its dominance cannot be easily brought down because of its integration with other assets. This integration can be anything ranging from direct gold purchases to gold-backed assets.
A recent analysis by Mati Greenspan, the senior market analyst at eToro had shown that the correlation between Bitcoin and gold was getting more and more pronounced amidst global shifts in finance and politics. Gold, despite its superior holdings, has been moving in patterns similar to that of Bitcoin with a correlation factor of 0.22. Greenspan spoke about this number by tweeting:
“Yes. The numbers are still small though. I expect they’ll likely rise drastically over the next few years.”
Another upside of Bitcoin holdings has been its return on investments that have trumped even that of markets such as the S&P 500 and Nasdaq.