From a historical perspective, after 17 years of exposure, 18 years of panic, and 19 years of greed, what changes have taken place in the global market in the past year and a half since Bitcoin was “halved” again in May 2020? Let’s take a look at the following two charts on the annual comparison of the scale of various global assets.
From the above two figures, Bitcoin is moving towards the positioning of digital gold. Its first goal is to reach the market value of gold. As has been shown since March 2020, Bitcoin has the function of value storage. Gold has been playing this role for centuries, but Bitcoin is catching up with gold in the hearts of a new generation of investors.
Since March 2020, the market value of gold has increased by 42%, while that of Bitcoin has increased by nearly 600%. In the face of potential monetary inflation, gold performed well, but Bitcoin performed significantly better.
In March last year, the market value of gold was 60 times that of Bitcoin, but now it is only 9.8 times. The gap has narrowed sharply in just 18 months. It is expected that this trend will continue in the next few years. For Bitcoin, the main goal in the next decade remains the same – to catch up with the market value of gold (about 10 times the growth potential).
Hedge fund billionaire Paul Tudor Jones also said recently that Bitcoin is now his preferred channel to hedge inflation. It plays a very good hedging role and is winning the competition with gold. In addition, he believes that the newly launched Bitcoin futures ETF is a legal product subject to regulation, but it is better to have physical Bitcoin.
Boosted by the ultra loose monetary policy of the Federal Reserve, the market value of other markets also rose significantly. Since last March, the global stock market has risen from $73 trillion to $96 trillion, up 32%. The global stock market has absorbed a large amount of funds, especially the US stock market. Many US companies’ valuations have been pushed to record levels.
The ultra loose monetary policy of the Federal Reserve has boosted the global money supply from $90 trillion to $100 trillion, sending a signal of monetary inflation to the global population. The market value of the global real estate market also increased from 228 trillion US dollars to 290 trillion US dollars, also achieving strong growth. Finally, the global debt, which was already worrying before the outbreak of the COVID-19 epidemic, has surged in the past 18 months and now exceeds $300 trillion.
Public debt in almost all parts of the world is accelerating strongly. The United States has the largest public debt in the world, exceeding $28 trillion. According to the forecast, it may reach 30 trillion dollars in the next few months, and the ratio of debt to GDP is now more than 130%.
The above figures are all to illustrate that under the flood, the market value of various assets is difficult not to be raised. At present, although the unit price of Bitcoin has exceeded $60000, which seems to have little room for growth, its market value is only slightly higher than $1.15 trillion, and it still has considerable potential in terms of its benchmark assets.
If Bitcoin can complete three adoption stages, it will become the value storage, payment means and measurement unit. Then it may go further after exceeding the market value of gold. Michael J. Saylor (CEO of MicroStrategy) believes that the market value of Bitcoin in the future is 300 trillion dollars (a very exaggerated number). The author believes that the specific market value cannot be predicted, but as long as the world is moving towards digitalization, the Bitcoin market is likely to become one of the global mainstream assets in the future.
Speaking of prediction, it doesn’t remind us that in 2009, Hal Finney, an American computer engineer, had talked about that the highest price of Bitcoin could reach 10 million dollars in the future when Bitcoin was born. Although this goal seems impossible, when Bitcoin was just created, who would dare to imagine that it had reached the market value of trillion dollars in just over ten years?
What stage has the encryption industry reached? According to Crypto.com’s report. As of June 2021, the number of cryptocurrency users in the world will be about 221 million (less than 3% of the world’s population). Blockchain, cryptocurrency, DeFi, NFT and other products of the new era are very new to most people. 2021 can be said to be the first year for institutions to officially participate in the encryption industry, and the convergence between the encryption industry and national regulators has just begun. In the next five to ten years, after the large-scale adoption of blockchain and cryptocurrency, the entire industry may reach a new height.