The connection between gold and bitcoin (BTC) as stores of value is obvious, and the demand for BTC as a digital store of value was a big reason why the cryptocurrency grew in popularity, crypto services provider Matrixport said in a report Monday.
Bitcoin’s market capitalization is $540 billion, equivalent to 10.8% of the market cap of physical financial gold, Matrixport said, adding that gold exchange-traded-funds (ETFs) are valued at $200 billion.
This is why potential approval by the Securities and Exchange Commission (SEC) of a U.S.-listed spot bitcoin ETF could result in inflows of $20 - $30 billion, potentially triggering a large rally in the cryptocurrency, the report said.
The SEC has dragged its heels on approving a spot bitcoin ETF, and in August said it was delaying its decision on all new applications until October. The crypto market is hopeful that such an approval will trigger a flood of mainstream money into the sector.
Still, bitcoin has an edge over gold as the private keys can be memorized, which eliminates the risk of confiscation, the report said.
“Even today, storing assets in the form of gold has not only become unfashionable in the digital age, but comes with significant restrictions when crossing borders,” wrote Markus Thielen, head of research at Matrixport, adding that “bitcoin offers a solution to this dilemma, enabling the swift and relatively inconspicuous movement of value across borders.”
“Therefore, considering the current state of technological developments, bitcoin’s primary roles are likely as a store of value akin to gold and a speculative financial asset,” the report added.
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