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Bitcoin at $100,000? Crypto Could Steal Market Share from Gold, Analysts Argue

January 5, 2022

4 min Read

Written by Yaël Bizouati-Kennedy

Edited by Nicholas Morine

D-Keine / iStock.com

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Bitcoin will continue to take market share from gold as a byproduct of broader adoption of digital assets — and possibly due to Bitcoin-specific scaling solutions — leading to a potential $100,000 price, a Goldman Sachs analyst said in a note. Several other financial experts agree with the bullish view.

The World Gold Council estimates that the private sector owns 44,000 metric tons of gold for investment purposes, such as privately-held bars and exchange traded funds (ETFs). This implies that the public owns about $2.6 trillion of gold for investment purposes, Goldman Sachs analyst Zach Pandl wrote in a note sent to GOBankingRates.

By comparison, Pandl wrote that Bitcoin’s float-adjusted market capitalization is currently just under $700 billion.

“Therefore, Bitcoin currently commands a roughly 20% share of the ‘store of value’ (gold plus Bitcoin) market,” Pandl wrote.

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 $100,000, for a compound annualized return of between 17 and 18%, according to Pandl.

“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,” Pandl added.

Bitcoin outperformed both gold and the stock market for the third year in 2021, as GOBankingRates previously reported.

Bitcoin Projected to Continue Rising

Bitcoin, hovering around $48,000 as of Jan.5, reached an all time high of $69,000 in November of 2021.

Mark Elenowitz, president of fintech company Horizon, told GOBankingRates he agrees with the premise that Bitcoin and gold are in competition for the store of value market, and Bitcoin “is undoubtedly winning.”

Bitcoin has seen growth every year since 2018, whereas gold actually lost value in 2021, he said.

“In fact, I believe that Bitcoin could reach a value of $100,000 even faster than the five-year time period the Goldman Sachs team predicted because Bitcoin isn’t just competing with gold as a store of value; it’s also a network with massive network effects and, like tech stocks, grows at an exponential rate,” Elenowitz said.

“Last year alone — a year in which Bitcoin recovered from an attack by China on its mining network — it grew at roughly 75%. That is a great return even during a year when Bitcoin was seen as not growing at its usual, very high rate. In short, Bitcoin is a new and growing kind of asset, and it would be a mistake to put it in the box of being just a store of value.”

Brock Pierce, Bitcoin Foundation chairman, echoed this sentiment. He told GOBankingRates that Bitcoin at $100,000 is a very reasonable estimate, “given all that has happened in the past year and the realizations that the Fed will continue to print money — regardless of decisions made around interest rates.”

“More and more people around the world are seeing the inherent properties of Bitcoin as being similar to gold, and in fact superior to gold,” Pierce said.

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