Since the outbreak of Covid, the world’s central banks and treasuries have printed more fiat currency. As the dollar has lost its value, people have put their money in assets like stocks, cryptocurrency, NFTs, artwork, and even Pokemon cards. The minutes from the Federal Reserve’s December meeting were released this week. The Fed intends to “shrink the balance sheet,” or reduce inflation in other words. The price of Bitcoin fell at this news, since it’s viewed as an inflation hedge. There’s still reason to be bullish, however, according to Goldman Sachs.
Bitcoin was down about 4% over the past 24 hours along with equities on Wednesday. The intraday sell-off occurred after the U.S. Federal Reserve pointed to a possible interest rate hike in March, which is sooner than many had expected.
But despite the price dip, some analysts expect BTC will stabilize in a range of between $40,000 and $50,000, which could keep volatility low.
Others are looking to alternative cryptocurrencies (altcoins) such as ETH, LINK, ICP, FTM that have outperformed BTC over the past week.
Ethereum isn’t just a cryptocurrency, it’s a platform for decentralized blockchain applications. Ethereum has been rising steadily, largely thanks to the NFT craze. NFTs are commonly used for artwork and interchangeable items in video games. But we’ve only started discovering their use cases.
This week, the YouTuber K-Dub spoke on his channel “Crypto Zombie.” He likened Bitcoin to digital gold, while altcoins are like tech stocks. Alt coins are growth opportunities because they’re attached to applications. Meanwhile Bitcoin is a store of value.
It would seem Goldman Sachs agrees with the store-of-value properties of Bitcoin. They say it will compete with gold in that area:
Bitcoin will take market share away from gold in 2022 as digital assets become more widely adopted, Goldman Sachs analyst Zach Pandl said in a research note to clients.
Citing bitcoin’s $700 billion market capitalization, compared to the around $2.6 trillion worth of gold owned as an investment, Goldman Sachs said that the cryptocurrency currently has a 20% share of the “store of value” market.
Bitcoin will “most likely” become a bigger proportion over time, Goldman Sachs said, in a list of 2022 predictions.
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