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While Bitcoin’s price has fallen since the start of 2022 and traded at $43,110 at the time of writing, Goldman Sachs believes that the crypto has the potential to reach as high as $100,000 in the long run. This could happen as BTC continues to compete with gold as a store of value asset and grab a portion of the precious metal’s share in the niche.
“Hypothetically, if Bitcoin’s share of the ‘store of value’ market were to rise to 50% over the next five years (with no growth in overall demand for stores of value) its price would increase to just over $100,000, for a compound annualized return of 17-18% (accounting for growth in Bitcoin supply over time),” Goldman Sachs’ co-head of foreign exchange strategy Zach Pandl said in a research note to clients, according to Coindesk.
Assuming gold at current prices of around $1,800 an ounce with 44,000 metric tons in circulation, the bank estimates that the investing public holds around $2.6 trillion worth of gold for investment purposes. Meanwhile, the publicly available float of Bitcoin is just under $700 billion, since a considerable amount of BTC is not available for trading. This means that the crypto currently accounts for around 20 percent share of the store of value (gold and Bitcoin) market.
Goldman Sachs believes that Bitcoin’s share will most likely become bigger over time. In a hypothetical scenario, the bank projects that BTC’s price would reach over $100,000 if the crypto grabs a 50 percent share in the store of value market, according to Reuters.
The bank added that BTC will have more applications beyond store of value, which could further drive its price upwards. “Bitcoin may have applications beyond simply a "store of value" - and digital asset markets are much bigger than Bitcoin - but we think that comparing its market capitalization to gold can help put parameters on plausible outcomes for Bitcoin returns,” Pandl said.
