Bitcoin has attracted attention from some of the world’s biggest investors this year.
The bitcoin price, up just under 30% so far this year despite a coronavirus-induced crash in March, has been hovering around $10,000 per bitcoin since its supply squeeze in early May.
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“While scarce and durable, bitcoin also is divisible, verifiable, portable, and transferable, a range of monetary characteristics that confer superior utility, potentially driving demand and deeming it suitable, if not superior, for the role of global digital money,” Ark Invest analyst Yassine Elmandjra wrote.
Ark, a bullish Tesla investor known for its massive $7,000 price target on Tesla stock, sees bitcoin potentially reaching 10% of gold’s market capitalization in just five years—up from around 1% now.
Ark originally bought into bitcoin back in 2015 when it was trading for just $230 per token, buying shares in Grayscale’s Bitcoin Investment Trust. Ark cashed out its Grayscale stake in 2018, telling CNBC it was a “complicated decision” driven more by regulatory and tax-related concerns than by the “merits” of bitcoin itself.
However, Ark continues to hold bitcoin in its “undisclosed, separately managed accounts,” Elmandjra said via email.
“We believe, as a suitable contender for the first global digital money, bitcoin should attract demand similar, at a minimum, to that for gold,” Elmandjra said, writing in response to Wall Street giant Goldman Sachs’ recent dismissal of bitcoin and warning “bitcoin’s complexity should not prevent financial institutions from analyzing it in depth.”
“Yet, contrary to claims that it is in a massive bubble, bitcoin’s network value—or market cap—is less than 2% that of gold’s,” Elmandjra said, adding that while bitcoin is “often called digital gold, we believe bitcoin not only shares many of gold’s characteristics but also improves upon them.”
Ark’s analysis chimes with recent research released by Bloomberg that bitcoin is increasingly acting as “digital gold.”
“Among the few assets up in this tumultuous year, gold and bitcoin are building foundations for further price appreciation, in our view,” Bloomberg researchers wrote in a June 2020 commodity report.
Bitcoin’s performance this year in the face of market turmoil sparked by the coronavirus pandemic has led to investors including the likes of Paul Tudor Jones, Dan Tapiero and Raoul Pal naming the cryptocurrency as a potential hedge against the inflation unprecedented central bank stimulus measures could bring.
“As the bitcoin network continues to mature, we believe that it will cement bitcoin’s role as an emerging monetary asset and that financial institutions will do well to consider it seriously,” Elmandjra said.