Popular bitcoin analyst Willy Woo called bitcoin $BTC “the perfect asset” for the next thousand years. However, in his opinion, the first cryptocurrency will not be able to compete with the US dollar and gold without a significant increase in capitalization.
Bitcoin needs large capital inflows
“The problem is that you cannot change the world if this monetary asset — in my opinion, the perfect asset for the next thousand years — cannot perform its function without an influx of capital sufficient to compete with the US dollar,” said the bitcoin investor at the Baltic Honeybadger conference in Riga.
The current capitalization of bitcoin is $2.42 trillion, which is less than 11% of gold's capitalization of $23 trillion. The money supply of the US dollar reaches $21.9 trillion.
Woo highlighted two main obstacles on the path of bitcoin to becoming a global reserve currency. The first is related to companies that make bitcoin their reserve asset. While such firms accelerate the adoption of the cryptocurrency, little is known about the structure of their debt obligations.
“No one has truly studied the debt structure deeply in public, so I am absolutely sure that weak companies will collapse with a bang, and people could lose a lot of money,” warned the analyst. He noted that companies choosing altcoins for similar purposes are now using the same strategy, which could “create another bubble.”
Woo expressed concern about how the adoption of bitcoin by companies would develop in the case of a significant market correction or bear market.
Threat of state intervention
The second risk is related to the fact that high-capital investors prefer to access bitcoin through spot bitcoin ETFs or pension funds instead of self-custody. This could concentrate more bitcoins within the reach of nation-states, increasing the risk of “state-level fraud.”
“High-cap investors do not choose self-custody. Instead, they seek to enter through spot bitcoin ETFs or bitcoin treasury companies,” Woo explained. He added that pension funds rely on institutional solutions such as Coinbase Custody.
Although these bitcoin platforms open up opportunities for a serious influx of capital, investors take on the risk of “being defrauded at the national state level.”
Self-custody will spread gradually
Max Kei, founder and head of the self-custody bitcoin platform Debifi, believes that self-custody of bitcoin will spread gradually — from large companies like Coinbase to ordinary businesses and finally to individuals.
“Companies will learn to self-custody and will do so. Then people within these companies will find out about it. And ultimately, it will just spread massively,” he predicts.
Corporations remain a logical starting point
Despite Woo's concerns about the risks of corporate bitcoin adoption, Blockstream CEO Adam Back believes companies are the most logical starting point for bitcoin adoption.
Using the expected future returns of bitcoin as a “hurdle rate” for investments, he said: “If a company cannot outperform bitcoin, it should shut down and buy bitcoin.” Back added that companies with a solid core business can still thrive by integrating bitcoin.