Bitcoin (BTC) is a decentralized digital currency, often referred to as a cryptocurrency, that operates without a central authority or single administrator. It was invented in 2008 by an anonymous person or group of people using the pseudonym Satoshi Nakamoto and was released as open-source software in 2009. Key Features: • Decentralization: Bitcoin operates on a decentralized peer-to-peer network, meaning... More is predicted to become a significant global asset, reaching a market cap of over $3 trillion by mid-2025, according to a recent study by dealer Bernstein. The study highlights that the fundamentals of Bitcoin are currently strong, with 70% of the total supply not being traded in the past year.
This high level of supply retention is unprecedented for a financial asset, especially one known for its volatile price movements driven by supply shortages. The upcoming Bitcoin Halving is a pre-programmed event in the code of certain cryptocurrencies, most notably Bitcoin, where the reward for mining new blocks is cut in half. This effectively reduces the rate at which new coins are created and earned by miners. Purpose: • Controlled Supply: Cryptocurrencies like Bitcoin have a fixed supply cap (21 million for Bitcoin). Halving ensures that the... More, expected to occur in April or May of next year, is also seen as a positive catalyst. The halving will reduce the monthly selling pressure from miners to less than $500 million, compared to the current $1 billion at today’s prices of $37,000 per BTC.
Additionally, new accounting standards set by the Financial Accounting Standards Board (FASB) will allow companies to book mark-to-market gains on their Bitcoin holdings. This change is expected to encourage more companies to hold Bitcoin as a treasury asset, creating additional demand from corporate entities.
Furthermore, the approval of a U.S.-listed Bitcoin exchange-traded fund (ETF) is seen as another tailwind for Bitcoin. This ETF would make it easier for both companies and retail investors to access and invest in Bitcoin.
Overall, the study suggests that Bitcoin’s Market Capitalization (often referred to as Market Cap) represents the total value of a company or cryptocurrency in the market. It is calculated by multiplying the current stock or coin price by the total number of outstanding shares or coins. Formula: Market Cap = Current Price of Asset × Total Number of Outstanding Shares/Coins Key Points: • Categories of Market... More will continue to grow significantly in the coming years, driven by strong fundamentals, the upcoming halving, favorable accounting treatment, and increased accessibility through ETFs. This presents opportunities for investors and companies alike to participate in the growing Bitcoin market.
To illustrate the points made in the study, let’s consider a real-world example. Company XYZ, a multinational corporation, decides to allocate a portion of its treasury reserves to Bitcoin. They do so because they believe in the long-term potential of Bitcoin as a store of value and want to diversify their holdings. By following the new accounting guidelines, XYZ can book mark-to-market gains on their Bitcoin holdings, which enhances their financial position. This decision also aligns with the growing trend of companies embracing Bitcoin as a treasury asset.