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TL;DR
- Fidelity Digital Assets released a report claiming that Bitcoin surpasses digital gold and could achieve a valuation of $676,000 or higher.
- Key insights include: Bitcoin’s distinct role as a monetary asset and store of value, its scarcity and fungibility akin to gold, and its enhanced portability and programmable features.
- If Bitcoin exceeds gold’s market capitalization, based on the currently mined supply, its worth could approximate $676,000 per BTC, nearly 24 times its present price of $28,400.
Fidelity Digital Assets has recently unveiled a Bitcoin report that was prepared in September. The cryptocurrency division of the $4.5 trillion financial powerhouse holds a very optimistic outlook for Bitcoin in the long run.
Below are some implications of Fidelity’s report regarding Bitcoin’s price.
Fidelity Digital: Bitcoin resembles digital gold
Among the significant findings and conclusions of the report are:
- Bitcoin is a monetary asset and a store of value that stands alone in its category.
- The price of Bitcoin is determined by the “most secure, decentralized, sound digital currency.”
- Competitors cannot improve upon Bitcoin without incurring necessary trade-offs.
- Bitcoin is a limited digital asset with an inflation rate comparable to that of gold.
- The price of Bitcoin is influenced by its scarcity and fungibility, similar to gold. However, its portability and programmable features enhance its value beyond that of gold.
Chris Kuiper, the director of research at Fidelity Digital, along with research analyst Jack Neureuter, authored the report. They argue that Bitcoin represents a completely unique asset class that merges the advantages of both gold and digital assets.
The concept of digital gold dates back to the foundational Bitcoin white paper by Satoshi Nakamoto:
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“The steady addition of a constant amount of new coins is analogous to gold miners expending resources to add gold to circulation. In our case, it is CPU time and electricity that is expended.”
The ultimate conclusion of the Fidelity report is that Bitcoin is a distinctive asset class and superior to gold as a long-term store of value.
If it’s like gold, could Bitcoin’s price reach $676,000?
The Fidelity team suggests in their paper that “Bitcoin’s value is driven by its enforceable scarcity.” They also highlight that Bitcoin’s inflation rate aligns closely with that of gold:
“Not only is bitcoin scarce (bitcoin’s current inflation rate of about 1.8% is roughly equal to gold’s inflation rate at the moment), but unlike gold, it is also provably finite. There will only ever be 21 million bitcoin.”
The global market capitalization of gold is currently estimated to be around $13 trillion for just over 200,000 above-ground metric tons of gold:
“The amount of above ground reserves for Gold are estimated to be around 205,238 metric tonnes according to the World Gold Council…”
If Bitcoin were to eventually surpass gold in market capitalization, based on the supply of approximately 19 million mined bitcoins, it could reach a price of up to $676,000 per 1 BTC.
At a recent Bitcoin price of $28,400, that would represent nearly 24 times the current value of the original cryptocurrency. In the near to mid-term, there are six critical factors influencing BTC’s price.
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