The September Edition of Bloomberg’s Crypto Outlook is extremely bullish on Bitcoin. According to the report, reaching $100k for Bitcoin and $500 for Ethereum “is a path of least resistance”.
As Bitcoin is reaching new heights, Bloomberg’s Senior Commodity Strategist Mike McGlone has called it the digital reserve asset.
Bitcoin in the Global Financial System
Bitcoin maximalists argue that it does possess the capability to become a global reserve asset. This is due to a far more superior monetary policy that allows a more equal wealth distribution. In general, central banks do not have a good track record controlling the inflation or even providing fair wealth distribution. The hope is that Bitcoin provides an alternative for the ancient monetary policies of central banks.
On the other hand, he massive flow of investment into Bitcoin is now eroding the gold market. Financial institutions are now taking quick actions to jump in on the action. In 2020, Bloomberg obtained a report to the clients from a JP Morgan Analyst that states:
“The adoption of bitcoin by institutional investors has only begun, while for gold, its adoption by institutional investors is very advanced. If this medium to longer-term thesis proves right, the price of gold would suffer from a structural headwind over the coming years.”
As of 2021, we can see that more and more investments tend to go into BTC rather than gold. In that regard, at a certain point, BTC has stabilized its position as a global reserve asset. According to McGlone, “Portfolios of some combination of gold and bonds appear increasingly naked without some Bitcoin and Ethereum joining the mix. A macro risk-off decline is a primary threat for the crypto bull market.”
The Future of Cryptocurrency
Taking a look at the current trends, there is no doubt the future is digital. As the giant brands create join the metaverse and central banks adopt the Blockchain technology, there are signs that gold is losing dominance. The digital future requires a digital currency and right now Bitcoin is king.
“We foresee a future of BTC, the digital reserve asset, complementing the dollar reserve currency.” Says McGlone. It would not be so far-fetched to assume that BTC can replace gold as the center of the global financial system. On the other hand, as likely as that sounds, there are many regulatory, political and social challenges to consider before shooting that high.
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