Bitcoin has been on the rise since it fell below $10,000 two weeks ago. However, the world's leading cryptocurrency has not been able to give investors a good signal because it failed to decisively break through the resistance level of $11,000 .
Although the short-term outlook is uncertain, the latest research has identified four market opportunities that may make Bitcoin's valuation reach trillions of dollars within five years .
Yassine Elmandjra, a crypto asset analyst at ARK Invest, released a report called "Bitcoin as an Investment" on September 17. The analyst believes that Bitcoin is currently " the most compelling asset since gold ."
The report points out four key market opportunities that will trigger Bitcoin's next huge rebound: Bitcoin becomes a global settlement network, realizing personal sovereignty, Bitcoin's ability to act as digital gold, and Bitcoin as a hedge against legal depreciation .
Opportunity 1: Bitcoin as a global settlement network
Elmandjra said that Bitcoin may eventually become the preferred settlement system for banks and businesses, and Bitcoin is most suitable for this role because its value cannot be manipulated by central institutions (such as central banks) and cannot be censored .
The report further cited the economics of Bitcoin as a settlement network. The report further stated:
"In the global network of 850 banks, the Bitcoin network can conduct a transaction with other banks every day. In the United States alone, a total of 14.7 trillion US dollars in deposits each year generates 1.3 trillion US dollars in interbank settlement. To obtain 10% of these liquidation volumes at a similar deposit rate, we believe that the size of the Bitcoin network will increase from approximately US$200 billion to US$1.5 trillion, an increase of more than 7 times ."
And the market value of $1.5 trillion is equivalent to $75,000 per bitcoin.
Opportunity 2: Use Bitcoin as a non-sovereign asset
Bitcoin's properties as a censorship-resistant currency make it very unique. The fact that cryptocurrency is non-sovereign indicates that users’ wealth cannot be directly confiscated by certain corrupt regimes or legal currency currency .
The analyst explained: "If the probability is 5% globally on average, the market value or network value of Bitcoin may increase from $200 billion to $2.5 trillion, an increase of more than 10 times."
Opportunity 3: Bitcoin surpasses gold to become a global store of value
Bitcoin's value proposition as a digital gold is another view put forward by investment analysts. For a long time, the top cryptocurrency has been hailed as the digital version of gold, and has been an asset for global value storage for thousands of years. However, crypto enthusiasts claim that Bitcoin is better than gold because of its portability and verifiability, unlike gold.
Bitcoin, which accounts for only 10% of the gold market share, can push its value to $1 trillion, a five-fold increase from the current $200 billion.
Opportunity 4: Bitcoin can be used as a hedge against currency devaluation
The final argument that Bitcoin's value may increase significantly in the next five years is that it has the ability to hedge against a weak national currency . Bitcoin has become a viable saving tool among citizens who have lost confidence in fiat currencies due to inflation and, in some cases, hyperinflation.
If in addition to the four legal currencies (USD, Japanese Yen, Renminbi, and Euro), Bitcoin can capture 5% of the global monetary base, the market value of cryptocurrencies may reach 1.2 trillion US dollars.
Therefore, the conclusion of the study is, “Bitcoin provides one of the most compelling risk-return characteristics of assets, because our analysis shows that Bitcoin should expand from the current scale of approximately US$200 billion to Total network capital of 1-5 trillion US dollars ."
At the same time, as of press time, the transaction price of Bitcoin was $10,676.53, and the market value was $197 billion. According to data from ARK Invest, by 2025, the market value will reach 3 trillion US dollars , which means that the value of Bitcoin will just exceed 140,000 US dollars