Bitcoin ‘could hit £100k within five years’ as more investors see it as a digital gold, predicts Goldman Sachs
Bitcoin could hit $100,000 within five years if more investors see it as an alternative to gold, according to Goldman Sachs.
The first and most well-known cryptocurrency 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 ‘stores of value’ assets are places where investors can put their money during times of economic shock or market turmoil and trust their cash will retain its price.
Safe haven? 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
If Bitcoin’s share rises to 50 per cent in the next five years, Goldman estimates a single coin would be worth $100,000.
But, the investment bank added, the vast amount of energy used in the Bitcoin network could be a barrier to 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 is currently worth around $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. A spring rally that took prices to $64,000 had fizzled out by July, when it slumped to $29,000, before rising back to $69,000 in November.
There is a cap of 21m Bitcoins – which only exist digitally as strings of computer code – which are gradually unlocked through electricity-intensive ‘mining’. Most investors only own part of a Bitcoin.
The cryptocurrency was unveiled in a 2008 paper written by Satoshi Nakamoto – whose true identity has never been revealed. It launched on January 3, 2009.
In February last year the currency’s market value hit $1trillion for the first time, while more recently Morgan Stanley offered wealthy clients access to Bitcoin funds and the first Bitcoin exchange, Coinbase, went public on the New York Stock Exchange.
However, it was also hit by setbacks as China banned Bitcoin mining and later all payments using the currency. Last year analysts and banks said Bitcoin could be worth $100,000 by as early as next year.