Bitcoin came into 2022 nursing what, for any regular asset, would count as a grievous body blow.
For Bitcoin, though, December’s 19% drop (figure below) was just another month at the office.
Although it was the worst monthly showing since May, the fact that one needed only travel seven months back in time to find a comparable decline spoke to the mercurial coin’s notorious mood swings.
For the year, it rose 60%, although on a risk-adjusted basis, it didn’t measure up particularly well. 60% was also the “worst” up year since 2015.
The crypto pages are awash in predictions for 2022. Bloomberg asked some “experts” whether $100,000 is on the horizon, for example. One said yes. By June, in fact. Others worry a hawkish Fed will cause crypto to lose some of its luster.
Speaking of lost luster, it’s fair to call gold a huge disappointment. It must have been bitter indeed for gold bulls to see the yellow metal meander haplessly through a year that witnessed the hottest US inflation in four decades.
With all of that in mind, Goldman’s Zach Pandl addressed Bitcoin in a “bonus question” at the end of a piece out Tuesday presenting five key FX questions for the new year.
“Will Bitcoin take additional market share from gold?”, Pandl asked, before answering himself: “Yes.”
Pandl estimated public ownership of gold for investment purposes at about $2.6 trillion. “By comparison, Bitcoin’s float-adjusted market capitalization is currently just under $700 billion,” he went on to write, in the course of suggesting Bitcoin’s implied share of the “store of value” market is around 20% (figure below).
Goldman said Bitcoin will “most likely” continue to grab share, in part due to wider adoption of digital assets.
“Hypothetically, if Bitcoin’s share of the ‘store of value’ market were to rise to 50% over the next five years (with no growth in overall demand for stores of value) its price would increase to just over $100,000,” Pandl said.
Don’t call it a price target.
Or call it a “store of value”