The debate over the value of cryptocurrencies, and bitcoin in particular, continues in financial markets as major institutional investors debate their role in portfolios.
One strategist with an optimistic assessment of the value of Bitcoin is Dhaval Joshi, chief strategist of BCA Research’s Counterpoint product. He shared the questions of one of his skeptical customers and answered them.
Joshi’s main argument is that Bitcoin BTCUSD,
will increase as it becomes a larger share of what he calls the $ 15 trillion anti-inflation market, which is currently dominated by GC00 gold,
“As long as we have a fiduciary money system, there will be demand for an‘ anti-fiduciary ’asset that is a hedge against a degradation of the fiduciary monetary system,” he says. Movements by central banks to introduce their own digital currencies do not alleviate concerns about fiat money, he added.
Bitcoin currently accounts for 10% of this anti-credit market. “Because that fee doubles or triples, it arithmetically requires double or triple the prices of cryptocurrencies,” he says.
Although gold has an intrinsic value that bitcoin does not have, it can be melted down and used in jewelry, for example, most of its value comes from its dominant anti-fiat asset status. The price of gold in SI00 silver,
is about 70, while the inverse ratio of gold extracted to silver was 7.5 in 2019. Silver and platinum PL00,
trade more closely online with your mining ratio.
Joshi recognizes that bitcoin is more volatile than gold; and says, to account for the risk of larger dispositions, investors should have $ 1 of cryptocurrency for every $ 3 of gold. He also states that cryptocurrencies will be distributed, so it is important to have a diversified basket, with exposure to others such as ethereum ETHUSD,
This ratio between $ 1 and $ 3 gold implies that cryptocurrencies should be 25% of the market. That would bring Bitcoin in particular to $ 120,000. On Thursday, Bitcoin was changing hands at $ 56,720.
The rise in cryptocurrencies will also have implications for inflation. “With cryptocurrencies as a competitive trust system, the only way governments and central banks maintain our confidence in trust money is not to diminish its value. In other words, cryptocurrencies are the new watchdogs to prevent rampant inflation, “he says. He also recommends mining gold with little weight as the gold antifiat premium sinks.
Also read: Fidelity’s Tom Jessop says “we’ve reached a turning point” over bitcoin adoption
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