Summary
The approximately $2.3 trillion cryptocurrency market (Bitcoin, Dogecoin, Ethereum, stablecoins, etc.) has been soaring from the $1.3 trillion level as central banks appear to be winding down rate-hike campaigns and a risk-on mentality returns. Year-to-date, Bitcoin is up more than 150%, though it is still down 35% from all-time highs established in November 2021. In theory, consumers, investors, and traders all have reasons to like Bitcoin. For consumers, cryptocurrency can cut the middleman out of a transaction of value. But we think crypto volatility is too high to consider paying for a tank of gas (or even a Tesla) with Bitcoin. For traders, the ups and downs of the various cryptocurrencies are a major opportunity — as long as they are on the right side of Elon Musk’s tweets, or rapidly changing Chinese crypto rules, or the developing regulatory framework in the U.S. Investors wonder how far crypto is from becoming a mainstream security. We estimate the global equity market capitalization is approximately $110 trillion. Gold is about $12 trillion. For crypto to make it on the radar of most investment managers, we expect it would need to approximately triple in value to $5-$7 trillion. Then it could account for 2%-3% of total portfolio assets and could be used as a growth alternative. By then, there also might be more uses for and regulations to define the asset class (perhaps an ETF based on spot prices early next year), and more fundamentals to support valuation.
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Source: finance.yahoo.com