Here, Bitcoin’s only way to $ 300,000

As S&P 500 Just had its worst first half of any year since 1970, the cryptocurrency market has also fallen off a cliff. After approaching a total value of almost $ 3 trillion in November last year, the entire market is now worth only $ 888 billion as of this writing. In the midst of the bear market, investors fear that a recession is on the horizon, which will cause them to sell risky assets.

World most valuable cryptocurrency, Bitcoin (BTC -0.25%), has also cratered. However, I think there is a good chance that it will eventually bounce back. The price (on the afternoon of July 12) was $ 19,907 down from a record high of $ 68,790, but it is a clear path for it to one day reach $ 300,000. And that would be equivalent to a monster that is 15 times back.

Bitcoin as a medium of exchange

The creation of Bitcoin was launched in January 2009 and was truly revolutionary. A limitless, peer-to-peer internet-based currency completely reverses the traditional monetary and financial system, one that is controlled by governments. Although the idea was good and sensible, Bitcoin’s actual adoption in trading has been unimpressive.

According to Cryptwerk, Bitcoin is currently directly accepted as a payment method by 7,879 different merchants. And although there are a number of different financial services that allow users to use Bitcoin, such as Coin base‘s Visa debit cards and PayPal‘s Checkout with the Crypto feature, consumers are not really encouraged to do this.

Why use Bitcoin, a valuable asset that triggers a tax liability when it is sold, to pay for things? It is much better to buy and keep this digital resource. Using fiat, or state-issued currency, on the other hand, has worked because it is constantly inflated by massive stimulus measures. Maybe this situation will change in the future, but right now I do not see how Bitcoin can become an effective means of exchange.

Bitcoin as digital gold

Many Bitcoin bulls wants the best cryptocurrency to be a real medium of exchange, but in its 13-year history, this utility case has not taken off. Instead, Bitcoin’s most promising use is that it continues to become more popular as a legitimate value store, or digital gold.

Despite the recent market downturn, both individual and institutional investors are increasingly allocating small portions of their portfolios to Bitcoin. If it is seen as one inflation hedging or simply as a way to diversify the stock, I believe that as the knowledge and understanding of Bitcoin continues to increase over time, more people will own it.

Compared to gold, Bitcoin has some important benefits. Bitcoin is absolutely limited, since only 21 million coins will ever be created. On the other hand, the supply of gold may increase if the price of the precious metal rises enough to justify finding and opening new mines. As mentioned, Bitcoin can be used in transactions, which characteristic gold does not have. Also, Bitcoin is divisible and much easier to store.

Bitcoin’s market value today of $ 380 billion is about 3% of the 12.5 trillion golds in the world. Even if Bitcoin one day represents 50% of the gold market, which is not a big part of the imagination, the market value will be 6.3 trillion dollars. And the price of one Bitcoin at that time easily overshadows $ 300,000. I have no idea if the time frame for this is happening, but it seems to be Bitcoin’s most likely path to significant price increases.

Bitcoin in the money transfer market

There is another exciting application that Bitcoin can positively impact, and that is the market for global money transfers. Workers in the United States sent $ 74.6 billion home to family in other countries, with an average tax of 6% on a $ 200 transaction. With Bitcoin, the fee is largely non-existent. Furthermore, money transfers seem to fit perfectly with Bitcoin’s narrative of being a limitless global currency.

This is a great opportunity to unleash real economic value. The World Bank estimates that this year, $ 630 billion will be sent as remittances from economic power stations to low- and middle-income countries. Six percent of the huge amount is equivalent to 37.8 billion dollars, a significant amount that can immediately go from paying for fees to having a positive financial impact for those involved.

But as things stand today, Bitcoin’s biggest hope is to find a place in a larger number of investment portfolios. And if it can be a reasonable replacement for owning gold, a price target of $ 300,000 is an honest opportunity in the long run.