Bitcoin’s market capitalization is far lower than that of gold, yet Bitcoin’s day-to-day trading volume and the amount held in custody by funds imply that it is selling at a significant discount.
Bitcoin (BTC) has done an incredible double-digit jump this year, but it has been battling to break the $45,000 resistance recently. This barrier does not have any historic significance since it is easily broken. The same may be said for Bitcoin’s $850 billion market capitalization, which isn’t even near to silver’s $1.
The market value of Bitcoin is often compared to gold, the world’s most valuable metal with a total value of $12.3 trillion and as of now the leading global store of value solution. As a result, following institutional investors’ comparison between BTC and gold, it’s possible that the answer to $45,000 might be found. It’s
The “digital gold” thesis is being confirmed
Gold has long been associated with Bitcoin and Cointelegraph previously outlined Bitcoin’s numerous applications, but the narrative that it is a digital store of value has always been its main selling point. China’s social credit system, for example, brands offenders as social sinners and prevents them from receiving loans or using public transportation.
These occurrences may make an analysis of the gold to Bitcoin market capitalization even more important.
Most valuable tradable global assets. Source: 8marketcap.com
According to the data, BTC’s current $837 billion market capitalization translates to roughly 7% of gold. One should compare their daily traded volume and institutional holdings in order to evaluate how those markets are valued. Cryptocurrencies are notorious for phony exchange-traded volumes, but some companies, like Nomics, have developed their own adjusted volume
Accumulated 30-day volume on March 2, USD. Source: Nomics
Bitcoin has a $404 billion 30-day exchange volume, which translates to $13.5 billion per day, according to the above data. According to CryptoCompare’s February 2022 research, exchange-traded products like the Grayscale Bitcoin Fund (GBTC) added another $0.4 billion daily liquidity. As a result, Bitcoin currently
Meanwhile, according to GoldHub, there is $170 billion in daily liquidity for gold, including over-the-counter transactions. In addition to regulated futures markets and gold exchange-traded products, this includes registered over-the-counter transactions. As a result, Bitcoin volume accounts for roughly 8% of gold’s total daily liquidity.
Gold ETFs vs. Bitcoin Exchange-Traded Products: What’s the Difference?
Bitcoin’s multiple exchange-traded products, such as Grayscale GBTC and exchange-traded notes, have exploded in popularity. As a consequence, Bitcoin exchange-traded products have $37.8 billion in assets under management trapped within them. That is the same amount as 4.5% of the overall cryptocurrency market capitalization today
Total Bitcoin listed investment vehicles, USD. Source: Funds, Bloomberg, ETF.com
The amount of gold-backed ETFs is approximately $221.2 billion, according to GoldHub data on February 25. The total market capitalization excluding the aggregate 61 percent non-financial gold utilization (jewelry, industrial, etc.) is $6 trillion. As a result, the fund’s exchange-traded investment vehicles represent 3.
Bitcoin’s market volume and institutional investors’ holdings are nearly comparable to gold’s when measured in terms of dollars. While the $850 million market cap level may be a cause for concern for investors, Bitcoin has other developing use cases, such as El Salvador’s micropayment channels that employ Lightning Network technology.
As “digital gold” becomes a component of Bitcoin’s price model, traders will be inclined to price in greater upside and the $45,000 barrier should become irrelevant.
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