Bitcoin is the asset with the highest ROI when stacked against Gold, US Real Estate, US Stocks, Emerging currencies, and Oil, based on Willy Woo’s Bitcoin adjusted returns chart. This is a significant insight for Bitcoin traders, however, a lesser-known insight is that Bitcoin is now the 7th largest currency in the world. The current order is
US $4.9 Trillion
EUR $1.7 Trillion
CNY $1.2 Trillion
JPY $1 Trillion
CHF $0.8 Trillion
INR $0.6 Trillion
BTC $0.36 Trillion
Based on its market capitalization data from CoinMarketCap, BTC ranks 7th, at half the market cap of India. When Bitcoin’s market capitalization is doubled, it would cross the Indian Rupee’s market capitalization, and subsequently, on crossing $1 Trillion, it would be #4 and equivalent to the market capitalization of JPY. For climbing higher, Bitcoin’s drivers – rapid institutionalization and HODLing investors and traders are critical. The advancing Bitcoin-equivalent market cap of Grayscale Bitcoin Trust (GBTC) is a key driver, in the institutional segment. At about 550,000 Bitcoins on Dec. 2, GBTC’s market cap has more than doubled in 2020. Trust inflows have absorbed about 70% of new Bitcoins since the supply was halved again in May based on Bloomberg’s latest report.
The rising market capitalization trip would end if the liquidity of Bitcoin increased faster than demand. Though miner’s hourly inflow of Bitcoin to exchanges has increased by nearly 32% in the past week, based on data from Glassnode, at a market cap of about $330 billion, the price is closer to $55,000 vs. $18,000 in November ‘19.
Bitcoin’s market capitalization || Source: Bloomberg Report
Blomberg’s chart depicts a bullish indicator for Bitcoin — 180-day volatility at about 1.9x that of gold is the lowest in our database since 2010. The asset that current ranks #7 may climb up to #4 if this bullish prediction materialized by the close of 2020. The top metrics on which this depends are demand on spot exchanges, increased unspent Bitcoins for whales’ Bitcoin wallets, and HODL waves. Institutions are consistently generating demand, however, retail traders need to steer clear of FUD and maintain the trade volume and active participation, rather than withdrawing funds from exchange wallets.
If outflow from spot exchanges like Binance and OKEx is contained, the market capitalization may possibly continue growing past $1 Trillion due to lack of other resistances, apart from regulatory uncertainty. From a bubble to the7th largest currency in the world, the climb is a difficult one, but retail has booked profits along the way and there may be more in store before the volatility settles and correction sets in for the next phase of the market cycle.
