In a note sent to clients this week, foreign exchange analysts at the US investment bank said bitcoin could reach the level in the next five years as it continues to win market share from gold in the “store of value” market.
“Bitcoin currently commands a roughly 20% share of the “store of value” (gold plus Bitcoin) market,” analysts wrote. “We think that Bitcoin’s market share will most likely rise over time as a byproduct of broader adoption of digital assets.
“Hypothetically, if Bitcoin’s share of the “store of value” market were to rise to 50% over the next five years (with no growth in overall demand for stores of value) its price would increase to just over $100,00.”
While hypothetical, the calculation suggests bitcoin would more than double from its current level and eclipse the all-time high of $68,789 reached last year. The world’s biggest cryptocurrency by value is currently trading at $46,139.
Goldman analysts 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.”
Bitcoin reached all-time highs last year thanks to a combination of renewed retail investor interest and increased institutional adoption. However, bitcoin also gained thanks to a growing acceptance among investors of bitcoin as a digital alternative to gold.
The code underlying bitcoin ensures there can only ever be 21 million bitcoin in circulation and this scarcity theoretically helps maintain value, similar to gold. Hedge fund billionaire Paul Tudor Jones last year said bitcoin was “winning the race against gold” and analyst at JPMorgan said bitcoin’s rally last year was driven by “the perception of bitcoin as a better inflation hedge than gold.”