Summary
Bitcoin is undergoing a civil war of sorts.
The currency could split into two within less than two weeks - which would be a volatile mess.
Yet, bitcoin’s loss could be a big gain for fellow cryptocurrency, ethereum.
Bitcoin, and by default, the Bitcoin Investment Trust (OTCQX:GBTC), is becoming a binary - and rather volatile - investment. Granted, cryptocurrency isn’t known for its stability, bitcoin will be borderline bipolar over the next couple weeks as the cryptocurrency goest through an internal battle that may lead to a split into two currencies.
Digital gold.
Many point to the silver lining for bitcoin. Bitcoin’s market cap is roughly $40 billion, just a fraction of gold’s $7.5 trillion market value. The supply of bitcoin will also grow slower than that of gold over the next half decade. Bitcoin’s ability to prove itself as a better store of value than gold could be the next legup for bitcoin and cryptocurrencies in general.
There will be near-term volatility and uncertainty with bitcoin; however, longer-term the idea that made bitcoin so exciting could still be intact. Fundstrat believes that bitcoin could hit $20,000 by 2022. Part of what fuels that extreme price target is the idea that bitcoin could get a major boost from central banks moving from owning gold to owning cryptocurrencies.
The problem, however, is getting cryptocurrencies to a solid level - that is, the market value will need to move up about five-times from the current $100 billion before central banks show interest. But such a move would help cryptocurrencies become ‘legitimate’ and truly compete with gold. Sure, bitcoin is volatile. Bitcoin’s annualized volatility is roughly 75%. But volatility isn’t anything new for currency investors, even for gold investors. During the 1970s, gold’s volatility was 90%.
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