Bitcoin and cryptocurrency had a terrible start to 2022, continuing their downward trend from the end of last year as price pressures escalated.
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Bitcoin’s price has lost about 40% since its November peak, dropping from around $70,000 per bitcoin to this week’s low of $41,000. Meanwhile, Ethereum and other major currencies have also fallen, wiping out nearly $1 trillion from the value of the cryptocurrency market since its November peak.
Now, Wall Street giant Goldman Sachs
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“Bitcoin may have applications beyond a mere ‘store of value’ – and the digital asset market is much larger than Bitcoin – but we believe that comparing its market capitalization to gold can help set standards for reasonable results for Bitcoin returns,” Zach Bandel, Associate – Head of Foreign Exchange Strategy at Goldman Sachs, wrote in a research note. Bitcoin’s market capitalization is currently around $800 billion compared to $11.4 trillion for gold.
“Hypothetically, if the share of bitcoin in 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 rise to just over $100,000, for a compound annual return. of 17% to 18%”.
Bitcoin’s reputation as a digital store of value similar to gold has been boosted by the high inflation that has hit economies around the world over the past year. In May 2020, famed investor Paul Tudor Jones put bitcoin firmly on the map of Wall Streets when he called it “the fastest horse to beat inflation.”
Hung Fang, CEO of cryptocurrency exchange Okcoin said in comments via email, noting the scarcity of bitcoin with the steady supply of 21 million coins, its digital robustness and accessibility, as well as its resistance to censorship.
“Bitcoin is not just an asset class – the Bitcoin network has proven to be a viable global payment network, with Bitcoin serving as a programmable money,” Fang added. “In 2022, we will continue to see bitcoin establish itself not only as a store of value, but also as a medium of exchange and a unit of account.”
The price of Bitcoin has surged just over 400% since January 2020, leading to an asset price boom that has pushed stock markets to all-time highs — and helped the price of Ethereum outpace Bitcoin.
Last year, a leaked Goldman Sachs report predicted that Ethereum, the second-largest cryptocurrency after Bitcoin, had a “high chance” of overtaking Bitcoin as a “dominant” store of value – dubbed “Amazon”.
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Bitcoin’s success over the past few years has prompted companies and countries alike to start experimenting with it like never before. MicroStrategy Business Intelligence Software Company
Michael Saylor, CEO of MicroStrategy, has predicted that Bitcoin will eventually reach $6 million.
Meanwhile, the Central American nation of El Salvador has adopted bitcoin as a national currency alongside the US dollar as part of a plan to integrate bitcoin into its economy and society.