05 Jan 2022 · 2 min read

Bitcoin Could Reach USD 100K in Five Years If It Takes on Gold – Goldman Sachs

Source: AdobeStock / miomio13

 

A bitcoin (BTC) price of USD 100,000 could become a reality if the cryptocurrency continues taking market share as a store-of-value asset from gold, according to a note from Goldman Sachs. Meanwhile, Bloomberg analyst Mike McGlone argues that 2022 could be the year gold shines again.

At present, the US investment banking giant estimates that bitcoin’s float-adjusted market capitalization is just under USD 700bn, making up 20% of a store-of-value market comprised of gold and bitcoin. For comparison, the value of gold available for investment currently stands at about USD 2.6trn, Goldman Sachs wrote in the recently published note.

And while Goldman said that bitcoin could “hypothetically” reach a USD 100,000 price tag if it takes a 50% share of the store-of-value market, it also argued that the digital asset will continue to take market share from gold as crypto adoption grows.

The comments on bitcoin were given in a private note written by Goldman Sachs’ co-head of global FX and EM strategy, Zach Pandl.

In terms of the timeline for the lofty price target, Goldman’s analyst wrote that it could happen over the next five years, which would give a compound annualized return of 17% or 18%.

Lastly, the note stated that criticism surrounding the Bitcoin network’s electricity consumption – known in bitcoin circles as ‘energy FUD’ – will not stop investors from seeking exposure to the cryptocurrency.

And while Goldman Sachs argues that bitcoin will continue to take market shares from gold over the next five years, Bloomberg Intelligence’s Senior Commodity Strategist Mike McGlone said in a new report that gold could once again shine in 2022.

In a comparison with the industrial metal copper, McGlone wrote in the report that gold has outperformed copper over the past 10 years “for reasons that appear more enduring in 2022.”

Specifically, McGlone argued that a slowdown in China’s industrial sector could be a bad sign for industrial metals, while precious metals like gold could benefit.

Meanwhile, the on-chain analytics firm Coin Metrics on Tuesday said in its State of the Network report that although bitcoin has seen growing popularity in 2020 and 2021 as a hedge against inflation, things may change in 2022 as central banks take action to fight rising inflation, particularly in the US.

Source: Coin Metrics

However, the report also added that while US monetary policy may become tighter, inflation is also high in the euro zone and in countries like Turkey.

“With inflation running over 20%, Turks have already turned to alternative stores of value, which might include bitcoin and other cryptoassets or dollar-backed stablecoins,” the report said, before finally adding:

“If we are truly in the era of the Great Monetary Inflation, more institutions and individuals in 2022 across the world might be drawn to bitcoin’s assured scarcity,” the report said with reference to the term coined by the famous hedge fund manager Paul Tudor Jones.

At 11:13 UTC on Wednesday, BTC is trading at USD 46,746. It is unchanged in a day and down 2% in a week.

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Learn more:
- USD 100K per Bitcoin 'Hopium' Now Moved to Mid-2022
- Bitcoin and Ethereum Price Predictions for 2022

- 'Paper Money' Hits All-Time Low Against Bitcoin & Other Hard Assets – Pantera’s CEO
- Bitcoin Enters Price Discovery Mode, Lures Gold Investors

- Bitcoin's Battles: Volatility to 'Drive Investors to Gold', Ethereum to 'Dethrone' It
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