Goldman Sachs: Bitcoin Expected To Compete With Gold As "Store Of Value"

Alex Cheong Pui Yin

6th January 2022 - 2 min read

Leading financial services company Goldman Sachs said has that Bitcoin is poised to take more market share from gold, especially with the adoption of digital assets quickly gaining momentum.

In a research note, Goldman Sachs analyst Zach Pandl said that Bitcoin is expected to gain more than the 20% share of the “store of value” market that it currently commands. The “store of value” market is a segment comprising of assets that maintain their worth overtime without depreciating – in this case, it refers to gold and Bitcoin (often referred to as digital gold).

Pandl also went on to share that the stock value of Bitcoin ranges about US$700 billion at today’s price, while the value of gold owned as investment hovers around US$2.6 trillion. However, if the cryptocurrency is able to grab more than 50% of the “store of value” market share over the next five years, Bitcoin’s price could increase to just over US$100,000 (approximately RM420,000) – with a compound annualised return of 17% or 18%.

“Bitcoin may have applications beyond simply a ‘store of value’ – and digital asset markets are much bigger than Bitcoin – but we think that comparing its market capitalisation to gold can help put parameters on plausible outcomes for Bitcoin returns,” Pandl further said.

The research note also commented that Bitcoin network’s consumption of real-world resources will not weaken the demand for the asset. This is because Bitcoin-scaling solutions will continue to be attractive for investors.

Throughout the whole of 2021, Bitcoin’s price has endured through multiple plunges and surges, such as during the Crypto Crash of 2021 and the launch of the first Bitcoin-linked exchange traded fund (ETF), ProShares Bitcoin Strategy ETF (BITO), on the New York Stock Exchange (NYSE). It hit an all-time high of US$69,000 (approximately RM290,000) in November 2021 before declining throughout December 2021 and into the new year.

(Sources: Reuters, Bloomberg)

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Alex Cheong Pui Yin

Previously covered recruitment-related stories and had a short stint as a copywriter for the property industry. She subsequently developed an interest in investment and robo-advisors.

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