After rallying more than 100% in 2021, Bitcoin (BTC) appears to be struggling to turn the $60,000 level into support. After all, what is so special about this magic round number and its accompanying $1 trillion market capitalization?
Gold’s $11 trillion market cap might hold the answer, as Bitcoin’s existing trading volume and the amount held by institutional financiers appear to match 10% of the precious metal’s numbers.Technical indications and derivatives information offer fascinating short-term insights. But to evaluate cryptocurrencies in a broader context, one ought to focus on market capitalization, rare-earth elements and worldwide wealth.More Bitcoins than in 2017 Bear in mind that the 18.67 million existing BTC distributing supply is 11.2%more than existed in December 2017. For that reason, using unitary rates for longer-term comparisons can be deceptive. Bitcoin market capitalization, USD billion. Source: TradingView The$1.1 trillion valuation equates into a 250%boost from December 2017 peak market capitalization at $327 billion. So since of the additional releasing, that number varies from the 200%boost of the $20,000 nominal tag versus the existing$60,000. The rise of “digital gold”Another important metric, gold, the precious metal, has actually always been a proxy
for the leading cryptocurrency. Although Bitcoin has multiple usage cases, store of value has constantly been its flagship feature while the dispute behind its commodity-like features and currency persists.Regardless, as the United States expanded its monetary base over the past twelve months by 53%to an impressive$5.25 trillion, the number of institutional investors seeking Bitcoin as a safe haven for inflation increased. Legendary investors Ray Dalio and Paul Tudor Jones both compared Bitcoin’s distinct functions with gold, triggering much more business, insurers, and fund supervisors’attention.Therefore, the contrast
with gold’s market capitalization became even more appropriate. Many valuable global possessions. Source: 8marketcap. com According to the above data, BTC’s current$1 trillion market capitalization translates to roughly 10%of gold’s, worth$11 trillion. To evaluate how those markets compare, one ought to compare their volume traded, ETF and ETN markets, in addition to institutional holdings. Typical daily trading volumes, USD billion. Source: gold.org On the other hand, there’s$183 billion everyday liquidity for gold, including signed up over-the-counter(OTC)deals, in addition to regulated futures markets and gold exchange-traded products.
Collected year-to-date transparent volume on April 2, USD. Source: Nomics At the same time, the daily volume for BTC is roughly$15.9 billion. Exchange-traded items such as Grayscale Bitcoin
Fund(GBTC)include another$1.5 billion daily liquidity, according to CryptoCompare
. Therefore, Bitcoin’s $17.4 billion average daily volume can be compared to roughly 9.5%of gold. Gold ETF vs. Bitcoin exchange-traded products Bitcoin’s several exchange-traded items such as Grayscale$GBTC
and exchange-traded notes have been growing substantially. There are$ 58.7 billion assets under management, or AUM, secured crypto exchange-traded items
, according to CryptoCompare’s March 2021 report. Gold held by ETF products. Source: gold.org So with gold-backed ETF items amounting to $198.8 billion, Bitcoin’s$58.7 billion AUM represents 29.5%of this amount. However, a fair comparison requires to consist of physical holdings, the favored instrument of governments and banks. Meanwhile, regulation for many fund managers requires BTC holdings to use exchange-listed products, triggering the disparity.For instance, central banks and the IMF hold 35,197 tonnes of gold, which equates to $1.96 trillion. Gold.org quotes 44,384 tonnes are held by private investment, including ETF markets, and those are worth another$2.47 trillion. All of this amounts to$ 4.41 trillion in gold held by institutional investors.
Bitcoin addresses holding 100 to 10,000 BTC. Source: Santiment With Bitcoin, addresses holding 100 to 10,000 BTC own 48.9% of the supply, comparable to$ 538 billion held by large investors.Considering institutions ‘gold holdings amount to$4.41 trillion, BTC shows a 12.2%comparable indicator, hence supporting its current$1 trillion market capitalization. Yassine Elmandjra, a crypto possession expert at Ark Invest, believes Bitcoin has the prospective to surpass gold’s$ 10-trillion market cap. As Bloomberg senior commodity strategist, Mike McGlone puts it:”Bitcoin fills the digital reserve-asset requirement in a low-yield world.”McGlone goes further, nevertheless, adding that “adoption of the benchmark crypto as an international reserve asset has crossed the mainstream
limit,” which could move BTC cost to as high as$ 400,000 in 2021. So to sum up, Bitcoin’s average volume traded and large financiers ‘holdings approximately match 10%of gold’s markets. But while the$1 trillion market cap level may be a watershed moment for the next stage of Bitcoin adoption, BTC might remain pinned listed below $60,000 for rather a long time, particularly as some analysts think the rate might only see a major rise towards the end of the year. The views and opinions expressed here are solely those of the autho r and do not always show the views of Cointelegraph. Every investment and trading move involves threat. You need to perform your own research when deciding.