The buzz around the cryptocurrency space has intensified, thanks to Bitcoin’s record-breaking rally to a $1 trillion market capitalization.
Now the world’s flagship crypto is nearing yet another milestone of $60,000 after adding nearly $7K throughout the week. After smashing through the record high of $58,000, Bitcoin became more expensive than one kilogram of gold.
Around this time, last year, Bitcoin was under $5,000. But now it is well over $50,000. And this development is indeed a pivotal moment for Bitcoin especially at a time when debates on whether the cryptoa-asset is investment-worthy have flourished among investors, analysts, and the public.
Several BTC pioneers and advocates have long pinned for the crypto-asset to be a digital store of value. And its gains have been fueled by signs it is gaining acceptance among mainstream investors and companies, from Tesla and Mastercard to BNY Mellon. And its prominence this bull season was due to the entry of these institutional players who also believed the store of value narrative.
Gold’s market cap stands at around $9-10 trillion. If one were to consider that Bitcoin gets to half of gold’s market cap, that still signifies an astounding growth of 4X, or $200,000. Hence, there is a lot of upside to the crypto if the store of value narrative strengthens for it.
Rough Patches For Bitcoin?
The world witnessed Bitcoin fair against traditional assets in 2020 right after suffering one of the biggest crashes in its history. Its proponents argue the cryptocurrency is “digital gold” that can hedge against the risk of inflation sparked by the massive central bank and government stimulus packages designed to counter COVID-19.
The value of US dollar incurred a sharp fall as a result of quantitative easing measures. Around this time, gold and Bitcoin both went up too, which strengthened its cause.
Despite an overall macro bullish trend, there are several hurdles that BTC has to cross. For instance, the asset class, in general, is patchily regulated and happens to be a highly volatile digital asset that is used very little for commerce.
While the latter has been changing slowly, many analysts and investors still remain skeptical.