Bitcoin (BTC) and gold: The two are often compared with regard to the store of value. Both assets can be used to store value. Bitcoin is easier to transport and sell, but its price is more volatile. Gold is the traditional Save Habour, but not as dynamic as Bitcoin. The picture shows a bitcoin in front of gold pieces.
Bitcoin (BTC) could reach a market cap of $ 1.3 trillion and more, according to asset manager Fidelity. In a new report produced in collaboration with top investors and thought leaders in the investment industry, Crypto Cash argues that Bitcoin’s market cap could skyrocket if it hits a fraction of the alternative investment market.
If Bitcoin were to capture 5% of the alternative market, as measured by the CAIA, it would represent additional growth in the market of $ 670 billion. A 10% share would add $ 1.3 trillion in market size.
Many reasons to continue investing in Bitcoin
The alternative investment market, which includes real estate, infrastructure, private equity, hedge funds, natural resources, private debt and commodity derivatives, has grown to $ 13.4 trillion and accounted for 12% of the global investment market in 2018, according to Fidelity.
The investment giant points out that the Chartered Alternative Investment Analyst Association (CAIA) predicts that alternative investments are likely to grow to 24% of the global investable investments market by 2025. Also, according to the report, the company sees some reasons why investors will keep investing in Bitcoin:
The rationale of certain Bitcoin holders for allocating Bitcoin is similar to allocating alternative investments – specifically diversifying the portfolio and improving the rate of return. Additionally, interest in Bitcoin and other zero-interest alternative investments could also surge in response to the Federal Reserve (and many other central banks) lowering the benchmark interest rate to zero (or below zero) this year. In a world where benchmark interest rates are near, at, or below zero around the world, the opportunity cost of not allocating Bitcoin is higher.
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A higher correlation through the institutions?
However, Fidelity warns that as more institutions enter the market, Bitcoin could become more correlated with other traditional assets and more vulnerable to external events.
Still, Fidelity believes that Bitcoin has distinct advantages over other assets.
However, Bitcoin is fundamentally less exposed to the persistent economic headwinds that other assets are likely to face over the next few months and years. Combined with its multi-faceted narratives and an interesting effect of the lingering retail sentiment and growing institutional sentiment, it could be a potentially useful and uncorrelated addition to an investor’s portfolio toolbox.
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