Crypto bulls have long believed Bitcoin (CRYPTO:BTC) will replace gold as the go-to safe haven asset, and by one measure, the crypto market, as evidenced by its overall capitalization, is already close to surpassing the precious metal in that respect.
A new report from global brokerage and research firm Bernstein, suggests that the industry’s overall market cap recently surpassed the $2 trillion mark, putting it on nearly equal footing with the amount of gold — a core component of most diversified investment portfolios — held by private investors.
“Investors need to find return streams that can hedge debasement risk and be a diversifier of equity risk at higher levels of inflation”, Bernstein said Tuesday (h/t: CNBC) in a note to clients, adding that cryptocurrencies “might have the potential to perform that function.”
Cryptos are continuing to grow in popularity and gain mainstream traction as interest for bitcoin and other alternatives from large institution and big businesses like Square (NYSE: SQ) and Tesla Inc (NASDAQ: TSLA) translates into more demand.
Turning back to gold, Bernstein was quick to point out in its research that based on its calculations the gold’s market cap (current price is $1,864/oz) is closer to $8 trillion, 4X the size of the crypto universe. This value was obtained by including gold jewelry into the equation.
Bernstein’s Harshita Rawat believes that despite the fact that for thousands of years the gold standard has bee recognized globally as a reliable form of money, bitcoin can still displace the precious metal once some of the regulatory and environmental questions are addressed.
“Bitcoin can more easily be used as a store of value in any part of world (especially in countries with unstable fiat currencies) and is very liquid,” Rawat noted, emphasizing the cryptocurrency’s 24×7 network and near instantaneous transactions. “The implications as a store of value, particularly in certain countries/regimes, are significant.”
Rawat also said BTC and cryptocurrencies more generally have “reached a tipping point” in terms of “institutional/retail adoption, dollar investments, talent working in the industry and liquidity.”
David Rosenberg of Rosenberg Research is less certain about bitcoin’s long term viability. In February, the former Merrill Lynch chief economist said the “day that Queen Elizabeth trades in the five pounds of gold in her crown for crypto is the day I’ll shift course.”
As of writing, Bitcoin is trading below $34K. The token has lost 21% over the previous 24 hours.