It’s hard to believe that bitcoin and other cryptocurrencies were flirting with all-time highs about a year ago. Today’s scenery is less exuberant; bitcoin’s price has fallen below $20,000 and maintained its current price range since mid-June.
Going forward, crypto participants should ask now how they can better understand the market, James Butterfill, head of research at CoinShares said during a public call on Wednesday. “This is very much an emerging asset class and bitcoin is an emerging store of value.”
The global monetary market is about $170 trillion across central bank foreign exchange reserves, corporate treasuries, gold and global broad money, according to a chart of data compiled by CoinShares.
“We look at the total potential value that is capturable and we think it’ll capture a certain amount of demand over a certain period of time,” Matthew Kimmell, digital asset analyst at CoinShares, said during the webinar. “As the bitcoin pie grows and captures more monetary demand, the size it captures in the market can make it less volatile.”
Bitcoin could potentially capture roughly 3.5% of the global monetary market in aggregate over the next 17 years, according to CoinShares.
“The potential value at the end of the timeline, in 2039, when Bitcoin supply is close to reaching its maximum limit, would be roughly $285,000 per coin,” Kimmell said. (Speculation on the future value of bitcoin has a long tradition of being a bit more optimistic than reality affords.)
CoinShares’ viewpoint is a conservative estimate by some market players’ standards. On Tuesday, ARK Investment Management CEO Cathie Wood said on Bloomberg TV that she still holds her forecast that bitcoin will be worth $1 million by 2030.
But in light of recent market turmoil due to FTX’s collapse, bitcoin was worth around $16,500 at the time of publication, according to CoinMarketCap data.
“Let’s not beat around the bush: [FTX’s downfall] is terrible for crypto’s image,” Butterfill said. “Just as bad as it was for bankers’ image in 2008. It does set back the industry a year or two.”
But compared to the historical adoption of other technologies like mobile phones and the internet, CoinShares predicts the adoption timeline for bitcoin to be on a 30-year track.
“So we’re a little ways into it so far,” Butterfill said. “But if you look at something like mobile phone usage, it took 40 years to reach a saturation point. The internet penetration is about 60% globally now — it’s following a slightly more accelerated curve than mobile phone usage was, and if you look at social networking usage [ … ] we can say it’s growing.”
The social media trend is slightly more accelerated, Butterfield said. “You can argue that the backbone for social networking is there, i.e., the internet, and you can argue that the backbone for bitcoin is there, i.e., the internet, as well.”
Demand will follow, and toward the end of the adoption timeline, bitcoin will likely reach a period where its growth will slow and become more saturated, Kimmell said.
Until the FTX implosion, bitcoin’s volatility dropped to about 21% on a 30-day annualized basis, which was below the Nasdaq’s 40%, Butterfill said.
“As it matures as an asset, that price volatility will decline,” Butterfill added. “That probably suggests we won’t see the fantastic price gains we’ve seen in recent years, but I think that’s fair.”