Goldman Sachs predicts that Bitcoin will reach $100 million in the next five years, if it is seen as an alternative to precious metals.
The first and most well-known crypto- currency already has around a fifth of the ‘store of value’ market worth £520billion, Goldman said. Gold has a near 80 per cent slice, which the bank puts at almost £2trillion.
These assets, known as’stores-of-value’, are places investors can place their money when there is economic turmoil or market turmoil. They also have the assurance that their cash will remain in good condition.
What is safe haven for Bitcoin? Bitcoin already has around a fifth of the ‘store of value’ market worth £520bn, Goldman said. Gold has a near 80% slice, which the bank puts at almost £2trillion
Goldman predicts that Bitcoin will reach 50% in five years. A single coin could be worth $100,000 if this happens.
The investment bank said that the Bitcoin network’s enormous energy consumption could prevent widespread adoption.
In a research note, Zach Pandl, co-head of foreign exchange strategy, said: ‘Hypothetically, if Bitcoin’s share of the store of value market were to rise to 50 per cent over the next five years (with no growth in overall demand for stores of value) its price would increase to just over $100,000, for a compound annualised return of 17 per cent to 18 per cent.’
Bitcoin currently has a value of $46,800.
It rallied by 60 per cent last year as big institutions and retail investors began to accept it as a more mainstream investment.
But prices also swung wildly – damaging its reputation. The spring rally that saw prices reach $64,000 by July had ended. It plummeted to $29,000 before rebounding to $69,000 in October.
There is a cap of 21m Bitcoins – which only exist digitally as strings of computer code – which are gradually unlocked through electricity-intensive ‘mining’. The majority of investors own only a small portion of Bitcoin.
The cryptocurrency was unveiled in a 2008 paper written by Satoshi Nakamoto – whose true identity has never been revealed. The cryptocurrency was launched in 2009 on January 3.
Last February, the currency hit $1trillion on its market. Morgan Stanley recently offered clients with high net worth access to Bitcoin funds. Coinbase was also made public by the New York Stock Exchange.
It was however also affected by China’s ban on Bitcoin mining, and then all currency payments. Analysts and banks estimated that Bitcoin might be worth as much as $100,000 in the next year.