Billionaire investor Mike Novogratz believes that Bitcoin won’t be used as your typical currency in the coming five years, terming the digital currency as “digital gold.” Novogratz was speaking during an interview with Bloomberg.
Ever since it came out a few years ago, Bitcoin has been a sensation. It has represented the kind of disruption we can expect from technology. But despite this, it has largely been popular with millennial tech-savvy investors. Older more traditional investors still believe that gold is the ultimate storage of wealth and they are right.
This precious metal is nowhere near as volatile as Bitcoin. Besides, Bitcoin is still a small asset class that’s susceptible to headwinds in the markets and increasing government regulation. But there are many out there who see the potential of Bitcoin and what it can become in the long term. However, it will still take longer than most people think for Bitcoin to become a generally accepted currency.
Yes, there’s potential and as a matter of fact, the digital currency will experience some upside in the coming years. But Novogratz still feels that this upside won’t be big enough to transition the digital currency in mainstream commerce.
Bitcoin does, however, remain one of the most valuable assets in the world. Just last week alone, the value of a single coin surged massively by 14% to close at $13,169. Although this is significantly less than the over $20,000 high the coin saw a few years back, it’s still substantial and way higher than most assets.
It's also important to note that the volatility of Bitcoin has become a bit stable in recent years. The cryptocurrency industry has also expanded massively. As of now, the entire industry is valued at $397.9 billion, which is way higher compared to the $195 billion recorded at the start of the year.
This growth also comes during a pandemic that has disrupted financial markets globally and most sectors of the economy. While this isn’t to say the crypto sector is immune to the ongoing public health and economic crisis, it does look like it has weathered the storm way better than most sectors.
Novogratz believes that many players in the financial industry are realizing the potential of Bitcoin. He expects more banks and other players in financials to develop capacities needed to support the digital currency.
This will ultimately lead to explosive growth in the long run. Besides, we are seeing a lot of banks invest heavily in blockchain as the next possible big thing in financial innovation. This means that they are looking at Bitcoin too as a possible future.
Bitcoin is currently the largest digital coin in circulation. The total market capitalization stands at roughly $244 billion, over 61% of the entire crypto market cap. This trend is expected to continue in the long term as well.