Bitcoin is in the process of replacing gold as a reserve asset as a store of digital value, according to a new report from Bloomberg Intelligence.

The research arm of the financial media company said that rising demand for the cryptocurrency alongside diminishing supply means that Bitcoin has the potential to hit the $100,000 price level this year as it builds towards becoming a global digital reserve asset.

The report comes after JPMorgan released a research note this week suggesting that Bitcoin could reach $146,000 in the long term as markets adjusted to it as an alternative currency.

However, the note warned this valuation was dependent on Bitcoin’s volatility dropping substantially in the coming years.

The Bloomberg Intelligence report predicted that rising institutional and consumer interest in Bitcoin would lead to further crypto-asset regulation in the coming years, with a particular focus on stable coins tracking the US dollar.

The research said that this move is likely to enhance the attraction of Bitcoin as the first crypto currency among more than 8,000 crypto-assets.

The fixed Bitcoin mining schedule sets it apart from most assets and markets with uncertain supply and demand meaning, BI said, meaning it is ripe for adoption as a global store of value – and in the process see its market capitalisation exceed that of Amazon.

The fact that the value of Bitcoin has increased 10 times while under the scrutiny of US regulators suggests growing acceptance of digital currencies, the Bloomberg Intelligence analysis stated.

The BI report, Outlook March Cryptos – Bitcoin making Gold redundant? stresses that the past three decades have not been good for commodity investors and increasing electrification, decarbonisation, and digitalisation points to a growing role for Bitcoin.

As the ‘benchmark’ crypto it gained legitimacy last year as well as experiencing declining volatility, BI said, encouraging allocators who previously chose gold to switch.

The report said that rising Bitcoin adoption makes it a “prudent” option for gold allocators, and increases the risk of the gold becoming redundant in a world going quickly digital.

BI commodity strategist Mike McGlone said: “Funds are flowing to the benchmark crypto from gold, bonds and stocks as evidenced by Tesla – the world’s largest automaker by market cap, allocating some of its wealth towards Bitcoin.

“The process of Bitcoin replacing gold in portfolios is accelerating and we see risks tilted toward more of the same.”

Share Story: