Bitcoin may be on its way to a new record rally, the recently released report from Grayscale Investment believes that Bitcoin is currently sitting at the same position as it was on early 2016 before its record breaking all time high.
In the recently release report, the firm depicts that Bitcoins demand will increase enormously as the value of US dollar depletes. As a result of the unstable economy from the global pandemic, this’d point direction towards an alternative asset with limited supply such as gold or cryptocurrencies. With the growing inflation, it’s expected that the Bitcoin and cryptocurrencies will be used on transactions and investment.
Supply and Scarcity – Bitcoin same as Gold
As with most assets, valuation and pricing is based on the balanced between supply and demand. Bitcoin doesn’t have it’s cashflow designed since the blockchain technology system on which it stands don’t operate that way. Although, the token’s supply is fixed and only 21M bitcoin will be existed. Like gold, it has a limited supply, which means he price gets shifted based upon the demand.
In May 2020, investor Paul Tudor Jones and his team analyzed the investment case for Bitcoin with respect to purchasing power, trustworthiness, liquidity and portability based upon the concerns of monetary and fiat inflation.
Fig. : Paul Tudo Jones Store of Value Scoring
While Bitcoin ranked lowest among the stores of value, it’s score implied a far higher market capitalization than it currently has available. The analysis helps to quantify the enormous size of addressable market for Bitcoin. The demand for cryptocurrency leads to an increase in the value of Bitcoin, which might be positioning the digital currency market on the edge of the major surge.