After mobilizing over 100% in 2021, it seems that Bitcoin (BTC) is struggling to make the $ 60,000 level supportive. After all, what’s so special about this magic circular number and the accompanying market value of $ 1 trillion?
The market value of 11 trillion dollars of gold may provide an answer, as the current bitcoin trading volume and the amount owned by institutional investors appear to correspond to 10% of precious metal.
Technical indicators and derived data provide interesting short-term insights. But to analyze cryptocurrencies in a broader context, you need to focus on market value, precious metals and global wealth.
More bitcoins compared to 2017
Keep in mind that the current market rate of 18.67 million bitcoins is 11.2% higher than it was in December 2017. Therefore, it can be misleading to use standardized prices for long-term comparisons.
Market value in Bitcoin, billions of dollars. Source: TradingView
The value of 1.1 trillion dollars corresponds to a 250% increase from the peak of December 2017 of 327 billion dollars in market value. Due to the release of the grant, this figure differs from the 200% increase for the inverted $ 20,000 figure over the current $ 60,000.
The rise of digital gold
Another important indicator is gold, precious metal, has always been the benchmark for the leading cryptocurrency. Although there have been several uses for Bitcoin, value preservation has always been the most important benefit, while disputes over commodity and currency features continue.
However, with the United States increasing its monetary base by 53% over the past twelve months to a staggering $ 5.25 trillion, the number of institutional investors viewing Bitcoin as a haven for inflation has increased.
Legendary investors Ray Dalio and Paul Tudor Jones compared the unique properties of Bitcoin to gold, attracting interest from several companies, insurance companies and fund managers.
Therefore, comparison with the market value of gold becomes more important.
The world’s most valuable assets. Source: 8marketcap.com
According to the above data, BTC’s current market value of $ 1 trillion corresponds to approximately 10% of $ 11 trillion in gold. To assess how these markets compare, one should compare their trading volumes, ETF and ETN markets and institutional holdings.
Average daily turnover, billions of dollars. Source: gold.org
Meanwhile, gold has $ 183 billion in daily liquidity, including over-the-counter (OTC) transactions, as well as regulated futures markets and products traded on gold exchanges.
Accumulated transparent trading volume since the beginning of the year April 2 in US dollars. Source: Nomex
Meanwhile, the daily volume of BTC is around $ 15.9 billion. Exchange-traded products such as the Grayscale Bitcoin Fund (GBTC) add another $ 1.5 billion in daily liquidity, according to CryptoCompare. Thus, the average daily bitcoin volume of $ 17.4 billion can be compared to about 9.5% gold.
Gold ETF for Bitcoin Traded Products
The diversity of products traded on the bitcoin exchange, such as Grayscale $ GBTC and ETFs, has grown significantly. According to a CryptoCompare report from March 2021, $ 58.7 billion in assets under management, or AUM, are locked in cryptocurrency trading products.
Gold in ETF products. Source: gold.org
So with $ 198.8 billion in gold-backed ETFs, $ 58.7 billion in Bitcoin-managed assets makes up 29.5% of that amount.
A fair comparison, however, must include physical assets – the preferred instrument for governments and banks. Meanwhile, the rules for most fund managers require BTC holdings to use listed products, causing discrepancies.
For example, central banks and the International Monetary Fund have 35,197 tonnes of gold, which is $ 1.96 trillion. Gold.org estimates that 44,384 tonnes are privately owned, including ETF markets, and are worth an additional $ 2.47 trillion. All of this gives up to $ 4.41 trillion in gold owned by institutional investors.
In the case of bitcoins, addresses containing 100 to 10,000 bitcoins contain 48.9% of the offer, equivalent to $ 538 billion owned by large investors.
With institutional gold reserves of $ 4.41 trillion, BTC shows a similar index of 12.2%, and supports the current market value of $ 1 trillion.