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Bitcoin has become a reliable cryptocurrency now more viewed as a reliable store of value. The beginning of the decade saw Bitcoin throw in a lot of promises, and despite its divided performance, it still has managed to add 40% to its price this far taking its market capitalization to a mind-boggling figure of $200 billion.
The beginning of the year Bitcoin was hovering near the $7000 mark per Bitcoin token but ever since the year began, it was on a roller-coaster ride. It even crushed hopes with its dismal performance in March when it went under $4000 before bouncing back to its current figure above $10,000.
We have seen a psychological turnaround in the case of Bitcoin where many traders and top investors turned to the most popular cryptocurrency as a hedge against inflation. Inflation was much predicted because the government was doing everything to increase the money supply by increasing spending and printing more money. What has added to the acclaim which Bitcoin enjoys is the fact that investors speak highly of it from a longer-term perspective.
A very important investor in Tesla, one of the most premium car markers has in fact put forth that Bitcoin’s total value is likely to upsurge and might cascade to $1 Trillion in the next 5 years and $5 trillion in the next 10 years. Yassine Elmandjra, an analyst at Ark Investment Management wrote in a report that investors should consider Bitcoin as an asset class. He said:
“Bitcoin offers one of the most compelling risk-reward profiles among assets, as our analysis suggests it should scale from roughly $200 billion today to $1-5 trillion network capitalization during the next five to ten years.”
In the last 8-9 years, Bitcoin has surpassed performance standards and has seen price increases even up to $20,000 per Bitcoin token. In late 2017 before coming down to a little over $10,000 now. The drop has been massive, but that does not rule out Bitcoin as one of the most reliable asset classes to be pitched in for the future as well. Elmandjra wrote.
“Our analysis suggests bitcoin is early on its path to monetization, with substantial appreciation potential. In our view, bitcoin’s $200 billion market capitalization—or network value—will scale more than an order of magnitude to the trillions during the next decade.”
But nothing comes without risks because Bitcoin has been derailing in the past. There are too many things going down with Bitcoin including external factors like lack of proper regulation and over-institutionalization of Bitcoin. This means that few trusted parties with the necessary funds are doing a majority of transactions and obstructing its value proposition.
Ark has been hopeful on Bitcoin for some time now. It first bought shares in the grayscale Bitcoin Trust (GBTC) in 2015 and cashed out its stake in 2018. The move was not as easy as it was backed by regulatory and tax-related concerns. However, the investor still has some GBTC shares via its exchange-traded fund ARKW as well as other products.