Goldman Sachs, the world’s largest investment bank, believes Bitcoin will bridge the gap between it and gold. If the digital asset reaches this, the bank expects that prices will approach six digits for the first time.
Goldman Sachs’ head of FX and EM Strategy, Zach Pandle, projected that once Bitcoin eats into gold’s market share, it will exceed $100,000. Bitcoin’s float-adjusted market capitalization is below $700 billion, according to the executive’s public statement, representing for less than 20% of the “lstore of value market between it and gold.
He arrived at this conclusion by evaluating the value of readily available gold for investment at $2.6 trillion.
According to the CEO, if Bitcoin’s market share hypothetically grows to at least 50%, the leading cryptocurrency might reach $100,000 within five years. If his prediction comes true, Bitcoin will have an annual compound return of 18%.
Over the last 12 months, gold has not provided investors with remarkable returns, forcing some to look to other asset classes. According to a Goldman Sachs return scorecard for the year 2021, gold barely gained 4% and ranked last on the list. Bitcoin, on the other hand, led the list with a 60 percent year-over-year rise, according to the investment bank.
These data may have had a significant impact in Zach Pandle’s prediction that Bitcoin would eat into gold’s market share.
Because to its poor performance since the beginning of the year, Bitcoin’s market capitalization has dropped to $789 billion. The asset is currently trading at $41,979, with trading volumes down by 24% in the last day.
In the past, gold was thought to be a safe haven asset that was immune to inflation. According to David Jones, market strategist at Capital.com, the measures for 2021 indicate that its attractiveness to investors is declining as it is locked in a no-land man’s between the expanding stock market and cryptocurrencies.