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(Figure 2) The scale of various global assets in October 2021 (unit: trillion US dollars).
Judging from the above two figures, Bitcoin is developing towards the positioning of digital gold, and its first target is the market value of gold. As it has demonstrated since March 2020, Bitcoin functions as a store of value. Gold has played that role for centuries, but bitcoin is catching up to gold in the minds of a new generation of investors.
Since March 2020, gold has gained 42% in market value, while Bitcoin has gained nearly 600%. Gold has done well in the face of underlying monetary inflation, but Bitcoin has fared significantly better.
In March last year, the market value of gold was 60 times that of Bitcoin, but now it is only 9.8 times. The gap has narrowed sharply in just 18 months, and this trend is expected to continue in the next few years. For Bitcoin, the main goal for the next ten years remains the same - to catch up with the market capitalization of gold (approximately 10 times growth potential).
Hedge fund billionaire Paul Tudor Jones also recently said that Bitcoin is currently his preferred way to hedge against inflation, it has played a good hedging role, and is winning the competition with gold. In addition, he believes that the newly launched bitcoin futures ETF is a regulated and legal product, but owning physical bitcoin is a better choice.
Other markets also saw sharp gains in market capitalization, buoyed by the Federal Reserve's ultra-loose monetary policy. Since last March, global stock markets have risen 32%, from $73 trillion to $96 trillion. Stocks around the world have absorbed a lot of money, especially in the U.S., where the valuations of many U.S. companies have been pushed to record levels.
The Fed's ultra-loose monetary policy has boosted the global money supply from $90 trillion to $100 trillion, signaling monetary inflation to the global population. The market capitalization of the global real estate market also increased from US$228 trillion to US$290 trillion, also achieving strong growth. Finally, global debt, already worrisome even before the COVID-19 outbreak, has ballooned in nearly 18 months and now exceeds $300 trillion.
Public debt is accelerating strongly almost everywhere in the world, with the United States having the largest public debt in the world at over $28 trillion. According to forecasts, it could reach $30 trillion in the coming months, and the debt-to-GDP ratio is now over 130%.
The above figures are all to illustrate one point: under the flood, it is difficult for the market value of various assets not to be raised. At present, although the unit price of Bitcoin has exceeded 60,000 US dollars, it seems that there is not much room for growth, but its market value is only slightly higher than 1.15 trillion US dollars, and it still has a lot of potential in terms of its benchmark assets.
If Bitcoin can complete the 3 stages of adoption, it becomes a store of value, a means of payment, and a unit of measurement. Then it may go further after exceeding the market value of gold. Michael J. Saylor (MicroStrategy CEO) believes that the future market value of Bitcoin is 300 trillion US dollars (a very exaggerated figure). The author believes that the specific market value cannot be predicted, but as long as the world develops towards the trend of digitalization, the Bitcoin market may become one of the global mainstream assets in the future.
When it comes to forecasting, it reminds us that in 2009, American computer engineer Hal Finney talked about the possibility that the highest price of Bitcoin in the future might reach 10 million US dollars per coin when Bitcoin was born. Although this goal seems impossible to achieve, when Bitcoin was first created, who would have imagined that it would reach a trillion-dollar market value in just over ten years?
So, what stage has the encryption industry developed to now? According to a report by Crypto.com, as of June 2021, the number of global cryptocurrency users is approximately 221 million (less than 3% of the world's population). The products of the new era such as blockchain, cryptocurrency, DeFi, and NFT are very fresh to most people. 2021 can be said to be the first year for institutions to officially participate in the encryption industry. It’s just the beginning. In the next five to ten years, after blockchain and cryptocurrency are adopted on a large scale, the entire industry may reach a new height. What kind of impact will Vitalik Buterin's "Road to Layer 2-centered Ethereum" just published at the 7th Blockchain Global Summit in Shanghai have on this industry and the market.
