The cryptocurrency industry has witnessed a tremendous amount of growth, considering that it is a relatively new market. A recent report has shown that the market’s total value is almost as big as the value of gold investments.
The report, which was published by Wall Street research firm Bernstein, revealed that the over $2 trillion cryptocurrency market is now almost the same value as the amount of gold kept as an investment.
The company noted that the potential of cryptocurrencies to serve as a hedge against inflation makes it a better alternative for investors, especially bitcoin which is often referred to as the “digital gold.”
It said,
“Investors need to find return streams that can hedge debasement risk and be a diversifier of equity risk at higher levels of inflation. These assets [cryptocurrencies] might have the potential to perform that function.
This need for an alternative investment asset coupled with the exposure from large institutional investors had increased the mainstream adoption of cryptocurrencies, according to Bernstein.
Several analysts have pointed out that bitcoin’s ease of transaction is one of its major selling points, making it a better safe-haven asset and hedge against inflation than physical gold.
Regulatory And Environmental Concerns Hinders Bitcoin’s Mainstream
While bitcoin is considered one of the best-performing assets of the past decade, the Bernstein report questioned the long-term viability of the asset based on several regulatory and environmental concerns.
A few days ago, the digital asset lost over 20% of its value and its market cap fell below the $1 trillion mark a few hours after Tesla announced that it will stop accepting bitcoin as payment based on energy concerns.
One of Bernstein’s top analysts, Harshita Rawat said that she is deeply convinced that bitcoin can replace gold once these regulatory and environmental issues are resolved.
She said,
“Bitcoin can more easily be used as a store of value in any part of the world (especially in countries with unstable fiat currencies) and is very liquid. The implications as a store of value, particularly in certain countries/regimes, are significant.”
However, Bernstein’s Inigo Fraser-Jenkins is not so sure that bitcoin, which is a little over a decade old, can gain the trust of investors within a short period compared to gold that is trusted by millennial investors like Peter Schiff.
According to him, it will take a lot of time for bitcoin to become trusted enough by investors and make it a safe-haven asset.
