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Bitcoin can potentially take a good chunk off gold’s market share over time as a “byproduct” of increased adoption, Goldman Sachs’ head of foreign exchange strategy Zach Pandl said in a note to clients on Tuesday:
“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 17-18% (accounting for growth in Bitcoin supply over time).”
According to Pandl, Bitcoin could surge along with innovations and “Bitcoin-specific scaling solutions.”
Goldman Sachs calculations estimate that the public holds roughly $2.5 trillion of gold for investment purposes, when taking a gold price of $1,800 per troy ounce.
Bitcoin’s float-adjusted market capitalization is just below $700 billion, Pandl notes, pointing out that this implies Bitcoin currently holds approximately 20% of the combined “store of value” (gold and Bitcoin) markets.
In November, Goldman’s Head of Energy Research, Damian Courvalingold, had said that gold “maybe becoming the poor man’s crypto.”