Investing in Bitcoin is actually a two-pronged investment. When you bet on Bitcoin, you are betting on:
1. As governments take on debt and devalue their currencies, demand for value-storing assets such as Bitcoin and gold will increase;
2. As a means of storing value, Bitcoin will become more and more widely accepted, on par with gold.
The second bet is just another way of saying it’s not too late to enter the Bitcoin market. This bet is still valid. Here’s why.
A mature store of value asset looks like gold. No one makes a fuss when institutions allocate to gold, or when central banks take billions of dollars off their balance sheets to invest. You don’t read a lot of media reports skeptical of gold, nor do you see sitting US senators forming an anti-gold camp. Gold has already “made it.”
Not so with Bitcoin. Even after this latest rally, Bitcoin is still a work in progress. When pension funds and endowments make small investments in cryptocurrencies, it’s still considered news. The Labor Department is still warning 401(k) plan providers not to include Bitcoin in their portfolios, citing the need for “extraordinary caution.” And when big hedge fund investors express bullishness on cryptocurrencies, it still causes a stir.
The market has come a long way with the huge success of Bitcoin exchange-traded funds (ETPs) and the rise of policymakers who support cryptocurrencies, but until Bitcoin becomes as mundane as gold — widely held by central banks and institutions — it’s by definition not too late to get in.
So why $500,000?
Today, the gold market is worth $18 trillion, and Bitcoin is about $2 trillion. This makes the store of value market about $20 trillion. When Bitcoin matures, it will at least share this market with gold.
There are about 20 million bitcoins in existence today—with the remaining 1 million to be created over the next century—so by the time Bitcoin reaches $500,000 it will have half the market share.
Until then, it's still early.
