New York-based VanEck, an exchange-trade fund provider with $50 billion in assets under management, just released an overview on the current state of the leading cryptocurrency Bitcoin (BTC).
The report says the leading cryptocurrency is “on the path” to becoming digital gold, highlighting a number of use cases where Bitcoin may have the advantage over the age-old store of value.
According to the researchers, Bitcoin and cryptocurrency outperform gold in several critical areas, including portability, divisibility, transactability and programmability.
The report states that Bitcoin adoption is accelerating, highlighting BTC’s daily liquidity of more than $1.75 billion and the emergence of mainstream methods of gaining exposure to the leading cryptocurrency through platforms such as Robinhood, eToro, TD Ameritrade and CME.
VanEck says a small Bitcoin allocation may improve portfolio upside, highlighting BTC’s risk and return profile from 2012 to the end of 2019.
“Bitcoin may enhance the risk and return reward profile of institutional investment portfolios. A small allocation to bitcoin significantly enhanced the cumulative return of a 60% equity and 40% bonds portfolio allocation mix while only minimally impacting its volatility.”
According to the report, scarcity is the main factor that could drive future Bitcoin bull runs. It singles out Bitcoin’s stock-to-flow ratio, which divides the total supply of an asset by the amount produced per year, as an indicator that suggests the price of BTC could rise to about $80,000 by 2021.
Although VanEck believes there may be potential upside to investing in BTC, the report also warns there are a number of factors that could prevent another bull run from happening.
Risks include Bitcoin’s dangerously extreme price fluctuations, cryptocurrency exchange hacks and the potential for encryption vulnerabilities in the years to come due to the rise of quantum computing.
You can check out the full report here.
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