Topic: Seriously. How much market cap can Bitcoin absorb from other assets? (Read 344 times)

My problem is with these predictions is that bonds, stocks and real estate mostly are assets which have also "use value" (as classical economists and Marxists say), not only "exchange value". These assets serve to satisfy a need of people:

- real estate - to live in or to do business in them
- stocks - as they're shares of a company they could be seen as the equivalent of a share of the "infrastructure needed to produce goods and services" (which, again, satisfy needs of people),
- bonds - very much the same than stocks, only that also states can use them, in this case they're are shares of other kinds of infrastructure (justice system, social security, defense etc.) which also satisfies needs.

Bitcoin can absorb a part of the "market caps" of these assets, but only a relatively small part - the part which corresponds to the overvaluation of the assets due to speculation. I expect this not be more than 30% in extreme cases, more close to 5% in normal conditions.

Take stocks for example: let's consider Bitcoin has absorbed a part of their market cap, leading to a smaller stock market. But likely, value investors would see an opportunity to re-invest in stocks because they are shares of "real things" with "use value" and also produce real cash flows like @Kyraishi wrote. Even derivatives have connections to that value, while the Bitcoin value proposition is much more abstract.

I very much agree with this quote from .@stompix:


However, I disagree a bit with respect of gold, and here I'm more optimistic. Gold (ald other precious metals) is a hybrid case. It has some use value (industry, jewellry), but most of its value is speculative. Even if we concentrate on jewellery - if gold wasn't as valuable as it is, then people wouldn't like jewellery as an investment or as a marriage/engagement gift. There is also an important psychologic factor.

Imagine Gold crashes 70% because banks/central banks divest it and instead prefer Bitcoin. Some (mostly older, traditional people) perhaps will take the opportunity and buy some gold jewellery, but it would be seen generally as something "cheap" and out-of-fashion. Like Bitcoin when it's "dead" again. Young people from the FFF generation will probably prefer jewellery made of 100% scrap metal recycled 100% with renewable energies.

So yes I think Bitcoin can "absorb" a large part of the gold "market cap". Maybe not 95% of it like the OP wrote but perhaps 50-80%. But with respect of the other asset classes it's imo only a tiny fraction.

Well bitcoin cannot really absorb 100% of the market of gold, the value of gold is mainly derived from two reasons, the first is its value as a metal, gold is used in several industries and it is obvious that bitcoin cannot steal that market cap as bitcoin is digital by nature.

The second reason gold has value is due to being a store of value, if bitcoin becomes the preferred form to store value then gold by necessity will lose market share and will go down in value, however I do not think this is something that is going to happen immediately and it will take time to materialize.

Once again gold could become as easy to get as aluminum.

In the 1800's aluminum was hard to get and was costly. Tech got better and it became cheap.

Those huge astroids are know to have 1000x the gold mined here.

Moving them to the moon and landing them on the moon may become feasible. Due to  lack of moon atmoshere and 1/6 the graivty of earth moving an asteroid safely to the moon is possible.

Having a solar powered magnetic shuttle to earth from the moon may or may not be possible but if it is.  Gold will become common as copper. Still be very useful just not that valuble. So betting on gold 11 to 1 over BTC may be dumb as can be.

Think if you had bet on aluminum over gold in 1850 you would be crushed now.

Same can happen to gold vs BTC.  real estate  vs btc is different as real estate does seem to be more limited than gold.
Terra forma the moon or mars  seems harder than getting 1 asteriod  safely down to earth.

Bitcoin has already reached $1 trillion marketcap during its ATH, It's possible that it could rise further but I'm just not seeing it to be bigger compared to gold which is currently at over $11 trillion, with the current nature of the market, it will not gain a massive adoption especially from investors who are not up to taking high-risk investment. I could be wrong as I never thought from the beginning that it would reach this high in just a very short period of time, but that's my stance now, gold is just superior IMO.

And that is just Bitpay. There are tons of other payment processors apart from Bitpay like Coinpayments and in Asia we even have PundiX though it seems to be on the downtrend. I just saw a processor called Coinspaid that has also processed billions of transactions (but as 3rd party for other sites so they are not famous),,, the numbers are staggering, we just do not see them

I didn't know about the 1+ billion dollar payment processed thing, that is huge number honestly for just one company, because let's be honest we do not pay just from bitpay as well, I never used it and I still paid so much and that is why I believe that we should not be considering any problems at all believing the real number is about 10+ billion dollars a year just on payments.

This is something people mainly use as investment at this point, not even store of value because they trade it but having 10+ billion dollars spending with the thing that people usually invest sounds insane.

Yes, I believe that it is a currency as well, but I still didn't expect that part of it being at the forefront of the usage, I was expecting it to be a lot lower because mainly people use it to make more fiat and not to use it for buying other stuff.

There is really no telling how much. Nobody could predict it with accuracy. We can only speculate, but our speculations are of course merely guesses. What we can be sure of I think is that there is indeed a kind of shift from traditional assets to new kinds of assets like Bitcoin. There are reasons for example why Bitcoin is considered the new gold. To someone who is more inclined to rising digital technologies, Bitcoin might be preferred more than gold.

I think it is very difficult to find out how much bitcoin can absorb market capitalization for other tokens, especially when market conditions often go up and down. yes bitcoin has entered the crypto currency with the largest capitalization in the world.

As people are tend to switch over to which investment is too hot for better returns then we could see all these to be happening obviously. From marketcap of $1T to $10T may not be a big job which will be true for the case of $100T as well because marketcap is just a number and no one will be needing to buy $100T worth of bitcoins to make bitcoin marketcap to be so. This way, we may see bitcoin to be worth more than $50M as well.

For the main question of this discussion, I will simply answer like bitcoin will absorb from each and every category of investments. Because, every human will love bitcoin for its unbelievable returns. So, just keep holding is the only thing, we need to do to ensure that we are also will be enjoying such huge returns.

Look, I'm not going to discuss this any further with you because it's clear that we're not going to reach an agreement. I don't know if I didn't explain it well in the OP or you didn't understand it well, but when I talk about Bitcoin absorbing market cap of other assets I'm talking about a years long process.

In my view, as of today Bitcoin has already absorbed some market cap of gold. Most of the money that has been put into Bitcoin, if it had not been invented by Satoshi in 2008, would be in the market cap of gold today. And for that it hasn't taken people selling nearly $1T in gold to buy Bitcoin.


You have made me think, because it is true that for example gold today is a store of value and practically not used as a currency (unlike in the past), while a lot of transactions are done in Bitcoin every day.

Well,,, we have to admit that most of us are in Bitcoin because of the potential for financial gain. I love how Bitcoin provides an alternative for those trapped in a system they do not benefit from or are restricted but most of us forum users at most use it as a better means of payment or like for me, from gambling. So you should expect people to have unrealistic expectations and perhaps thanks to them holding on for ever,,, we enjoy the benefits better;)

I never said "it is going to end up being a currency"! Bitcoin IS already a currency. In fact the only reason why it can also be considered a store of value, etc. is because it IS a currency which is its main utility that is giving bitcoin its value.

People have been using it for payments for a very long time. For example Bitpay used to report $1 billion worth of payments processed (>90% of it was bitcoin) annually last time they released the number which was before they stopped (right after they got their virtual currency license from the New York Department of Financial Services). And that's just BitPay which is not the best service to use, it is centralized among other issues. There are a bunch of payment processors and merchants can always accept bitcoin directly.

In other words bitcoin has been fulfilling the role of a currency in range of trillions of dollars every year.
The fact that there is a small rise in number of people who are making payments with shitcoins doesn't change the fact that the above number about bitcoin payments is growing tremendously.

Coin is very easily fully crash-able. it simply is in abundance according to this:

https://www.techtimes.com/articles/263854/20210806/nasa-plans-study-mine-goldmine-asteroid-worth-quadrillions-2026.htm

which is a follow up of this

https://www.foxnews.com/science/nasa-headed-towards-giant-golden-asteroid-that-could-make-everyone-on-earth-a-billionaire


So rare and precious metals may not be so much in 10-15 years.

A lot depends on easy space travel. Maybe a magnetic elevator system to the moon.

And really cheap metal happens before boomers die off. Figure boomers are all dead myself included by 2071.

I am thinking That those astroids will be harvested in 2030-2035. I would be 73-78 years old. So I simply do not see long term value in any precious metals at all. Even in my life time.

Remember the moon’s gravity is 1/6 that of earth. so landing pieces of asteroid there is feasible .

whether a magnetic levitational setup from earth to moon is doable how on earth do I know.  But betting all my money on metals staying high in value is dumb as fuck.

I still have coins silver platinum just not as much as I did.

BTW

history backs me up on this.

Aluminum dropped price when tech made it easy to get.

stainless steel dropped in price. can't find a good chart for it.

but aluminum dropped a lot. 17 a pound in 1851 to under 50 cents now. add in inflation and it got crushed.


https://www.theatlantic.com/technology/archive/2014/11/aluminum-was-once-one-of-the-most-expensive-metals-in-the-world/382447/


usa gold price in 1851 was 20 bucks an oz it would be 75 cents an oz  if it drops like aluminum dropped.

And it was all due to tech advances .

I don't know how much but there are a lot to be absorbed. There's a significant portion of gold's market cap. There's also a significant portion of silver's. And probably other metallic stores of value. The traditional market has stocks and bonds. A good portion of these will also be going into Bitcoin. And there are a whole lot of savings by ordinary people that are sitting in the banks earning almost nothing or even a net negative after inflation is factored in. This last one alone is probably enough to push Bitcoin's price a lot higher.

It's a bit ridiculous to say that bitcoin is able to absorb the market caps of shares and real estate in my opinion.

Shares just have way too much market capitalization, and they generate cash flows. So they appeal to another class of investors altogether.

Real estate can be speculative but I'd say at least half of the population actually live in their real estate "investments". BTC could divert some assets away from real estate bonds but not real estate itself imo.

Many people are overreacting on how much they could make with a bitcoin investment, and that is why there is a need to know how high it could get, and the reality is that if your only aim is to keep making more and more money then maybe bitcoin is not for you.

I am not saying do not make any money from bitcoin, of course you will want to make some profit, but it can't be 420 trillion dollars worth of money as we all know, we can't just hope for 100x on bitcoin as well, what we can do however is the fact that we could make some money, not a ton but some money and also use it, and store our wealth at the same time. This is the greatness about bitcoin, you do not lose networth and that means a lot.

I don't think we'll get to those crazy numbers because a lot of the money that's going to flow into the market will be in banks, companies, third parties that own bitcoin and give people coins of the same value as bitcoin (the same money-printing model where it's printed indefinitely.)

In fact, people will help governments with this. Many of them trust USDT just as they trust the paper dollar even though we all know that USDT doesn't have all that value as money in them bank accounts (1:1.)

This is not strange considering that this is a Bitcoin forum, but we are still a very small community if we take into account the number of active members. The vast majority of people in the world have a very difficult or no understanding of Bitcoin, and it will take a long time for new generations to perhaps change the way people view gold compared to Bitcoin.


Because of what I've already written, I don't believe it's possible, at least not in the near future - but if Bitcoin survives for the next 10-15 years, I think it will be much better positioned by then and most people will understand it much better than they are today. Big changes never happen overnight, and 10 or 20 years is a very short period of time for people to reject or largely replace traditional ways of investing with something completely new.

Better I do not know,,, easier to own, easier to keep, easier to sell, yes. Gold keeps value much better than Bitcoin though, as it is more predictable and less volatile. Bitcoin over 5 and 10 years yes, but if you suddenly need to sell your BTC within 2 or 3 years of buying it, be prepared to sell at a huge loss. Hence not a store of value equal to gold, hence not much absorption from gold market cap.

Man, it's pretty simple.
You can't absorb anything from a community, company, people who own something if they don't want to.
If people owning bmws are selling bmws and buying again bmws no other company will get any of their market share, there will be no absorption of buyers. Same for gold, if people will not sell gold and buy bitcoin it doesn't matter if bitcoin goes 1 billion times up in price there was no absorption.

Your title was about people dumping other assets in favor of bitcoin, not about inflation, when you mention absorbing six times and inflation once I think it's pretty obvious what was intended to be discussed. And no, bitcoin will not absorb 80% of the money people have invested in gold!

No, not really. You didn't quote the last sentence, in which by the way I missed the "no" but I think it's clear from the context.


(I've added the "not" in bold)

So, if in the next 10 years what has happened in the last ten years happens, that gold rises just a little bit without counting inflation, but even loses if we count inflation, and bitcoin rises parabolically, it is more than feasible. You can find gold with $15T market cap and bitcoin with $85T maket cap perfectly well. The only thing is that the dollar will be worth much less in 10 years than it is now.

Yes, it has to!


Your own scenario says so, and unless people sell at 5.5 times less than the actual price there is no way how this could be achieved, not even mentioning that we have an average of 3000 tons of gold being mined each year which adds around 150 billion to the market cap every time. Just as the price of bitcoin will not go down if nobody sells the same will be with gold, and gold bugs are far more resilient than bitcoiners when it comes to holding.

Gold wont be replaced by bitcoin for really simple reasons they are not in competition and neither product replaces the other.   That could be considered true with 30 seconds of reasoning, gold is an elemental part of the wider world which we happen to find useful in a monetary capacity at some times greater then others.   Right this moment, gold isnt largely used for currency we revolve around the dollar global reserve system and a reliance on debt which itself leans on politics and fiscal budgets.
   The greatest change in the world will be around the history of Bretton Woods agreement, leading to Nixon shock a quarter century later and present day 50 years on we are to witness the end of debt leveraged as a currency.   I dont know we steal market cap from anywhere except where gigantic failure is most likely, the debt that cant be repaid and that realization seems that most obvious point.   Interest rates at 5% instead of 0% we have would bankrupt most countries fiscal obligations, we are going to find out where that goes but BTC likely will be more used then.

Seems about right.

Gold is definitely something that bitcoin can absorb 100%.

Not sure about real estate or stocks. They are just two entirely different asset classes. BTC, as good as it is, cannot ever replace a PPOR. And it doesn't carry on business - it's just a medium of exchange, and hence it can never replace stocks as well. Those are a bit far fetched.

Yes, but that is not the general rule. I for example used to invest in other things, and now only in Bitcoin. The bigwigs that are getting into Bitcoin are at least partially stopping investing in other assets and that is going into Bitcoin.


Yes, I have already realized that you are very clear that Bitcoin is going to end up being a currency. As of today it is not, and I am not so clear. By Greshan's law, as long as there are low value currencies, people will tend to keep the Bitcoin and spend fiat currencies or shitcoins. I discussed this once with mk4.

Then there is the theory that the Bitcoin will end up being everything, unit of account, store of value and currency, which I guess is your vision, but that is still to be seen.


For it to absorb market cap, there does not have to be a gold market crash. Simply that people stop buying gold as a safe haven and buy Bitcoin instead, simply if what has happened over the last 12 years continues to happen, the price of gold has risen little or not at all if we take into account inflation and the price and market cap of Bitcoin have risen by a huge amount, as I say, simply with that, the market cap of Bitcoin can reach 5.5 times that of gold. It is a progressive process by which a person who has a coin worth $100 does not have to sell it for $20.

Well we've seen that institutional investors can pump the market already, so think if other investors suddenly sell their assets and move to bitcoin?

But to be honest, whether its from other assets or not, Bitcoin will still flourish, just a matter of time till we see trillion being poured on the market in the next several years. No need to question how much, it's the question of when and what will be the time frame, 5 years? 10 years?

What you are forgetting while calculating is the fact that the global wealth is growing every year, just recently USA government gave 3.2 trillion dollars pump into the stock market, so each year there will be more and more growth and that means eventually one day we are going to stop talking in trillions and start talking in quadrillions and at that moment bitcoin being super high is not a shock.

I am not saying that it will be hundreds of millions of dollars, but a million dollars in bitcoin looks like it's given, it is obvious, there is no way it will not happen, it WILL happen but we just don't know when. And after that it is just time that we need for it to reach 10 million and then 20 million then even more. These are not things that are "unknown if it will happen", these are things that will happen for sure, we just don't know when it will happen.

That is an interesting question and unfortunately there is not a direct answer, everything is going to depend on the circumstances that surround bitcoin, I think is pretty much a given that bitcoin is going to absorb a significant market share of gold because the main selling point of gold has been that it is a store of value, but bitcoin is able to perform that function in a more efficient way and as such is completely natural that the better asset absorbs the market share of the lesser asset.

However when we are talking about bigger numbers then without a doubt we're going to need a huge financial crisis, and by huge I mean one that is systemic and that puts all the economies of the world at risk, at that point the sky is the limit for bitcoin as there is nothing more valuable in a systemic crisis like that than a store of value.

The people who want to hold bitcoin will simply hold, while those who want to spend it will continue to spend. Or, maybe both. Is that too complicated? The point of bitcoin is freedom to do whatever you want to do with your money.

They have been doing this for years already LOL.

How do you imagine Bitcoin "absorbing" other assets?
The vast majority of the people suddenly deciding to sell stocks,bonds,gold,real estate and buy Bitcoins?
And then what?HODL those Bitcoins waiting for another ATH?This means that Bitcoin will confirm it's role of being "digital gold" rather than becoming a truly functional currency.Is that what we want?
The banks,hedge funds and the major corporations will begin with the FUD,the same moment they realize that the people are selling stocks/bonds and buying BTC.There will be a reaction from the fiat monetary system fro sure and that reaction will be major FUD,combined with lobbying to the governments to regulate the crypto world even more.

And why do you think the so-called gold market cap will crash 5 times?

First thing is that half of that so-called market cap is not in gold that stays in some vault in a bank and is in jewelry, are we going to seriously see a drop in demand for jewelry just because bitcoin is a better store of value? The cheapest engagement ring still is above 2 grams, multiply that by the population of the earth and you end up at least 3 times the gold reserves of the united states, even if we assume half of the world population is way too poor to afford one there are plenty who would compensate for an entire region of the city.

But leaving that aside, in order for gold to lose 5 times that value it would need people to massively sell it and this is just like bitcoin, if you have people who believe in the value of something it doesn't make sense for them to sell so cheaply and 5 times below the price they've bought in. And now the most important part, how are you going to convince ordinary people who don't care that much about technology that something they know has value, something they knew for a long time and something it's advertised all over the world as being of value that is less valuable than a bunch of numbers in an app? Not to mention that you can't have bitcoin plated rims, no matter how much you try.


Hihi, imagine this
People dump 50% of the shares in companies, land, houses, everything that makes wealth, and buy bitcoin with that money. What is the result? You will have half of the value in wealth and twice the value in currency. Guess where that leads to! Not a pretty place!

Why do you think bitcoin is "absorbing" market cap from other assets?!!!
For example I myself never had any assets the first time I bought bitcoin and if I hadn't done that the money would have stayed in my bank account doing nothing. There are a lot of people who are cutting certain bad-expenses (eg. quit smoking) and putting that money into bitcoin because it is BITCOIN otherwise that money would have never made its way to any "asset".

Additionally the places in the world where they treat bitcoin as a currency is increasing, specially among under-developed countries. As bitcoin adoption grows in these places and consequently the price rises they aren't absorbing the market cap from anywhere else.

That's the thing, you are thinking of bitcoin as an asset while it is actually a currency.
If there is indeed "around USD 420 trillion" in circulation then a unique global currency that works 24/7 so much faster and safer than all the 420 trillion combined should have a much higher value than the 420 trillion instead of only having 1/4 of it.

Bitcoin's potential marketcap ceiling is definitely high as hell, that's for sure. But a better question is, how likely are we to reach those high $10T+ or $100T+ numbers? I definitely think it wouldn't happen anytime soon, simply because it's unlikely for the genX-ers and the Boomers to be convinced of buying purely digital assets, whereas the concept of digital assets is far easily grasp-able by millenialls and genZ-ers. I'd say probably when the boomers and genX-ers retire and die off(morbid, I know).

I do not think so. If bitcoin will absorb gold marketcap significantly, it would have been obvious, also other assets. But what I noticed is that Bitcoin has been an alternative and has gained many people's attention that can result to more bitcoin demand, bitcoin has now been an asset alternative to others assets like gold. The extent to which people should buy gold and other assets may reduce as these are used to buy Bitcoin or other cryto assets. But with the devaluation of USD, there is nothing impossible because fiat devaluation will help in bitcoin's price valuation, and we do not know how to economy will be in the next 10 or more years.

Bitcoin is still about 12 years old, which is relatively small compared to many other financial assets. We can speculate all we want on the future price of Bitcoin, how much market cap it can absorb, or how it would become the one world currency, but that doesn't really matter.

For me, all that matters at this point in the growth of the network, is the next full node that goes live, or the next holder to trust verify the network, or the next merchant to accept bitcoin, or the next country to legalize it, or the next BIP which is implemented.

Bitcoin is a lot more than the dollar equivalent.

If the price of Bitcoin was decided on this forum, it would already be many millions. But it doesn't matter what people think here in grand scheme of things, you can forget about seeing Bitcoin flip gold until most of global investors view Bitcoin as better than gold. And currently this sentiment is very low, and rightfully so, gold has been the store of value for thousands of years, and Bitcoin has still to prove itself to many people.

After the latest crazy prediction about Bitcoin price, I seriously wonder how much market cap Bitcoin can absorb.

I think the vast majority of us on this forum would agree that Bitcoin is better than gold as a store of value and that it would make sense to absorb its market cap. If we have Bitcoin with a market cap of about $1T and gold with a market cap of about $11T, we see it quite likely that Bitcoin in the not too distant future will have a $10T market cap and gold $2T. This would leave us with a price of $0.5M per Bitcoin.

However, there are several authors who say that it will absorb even more market cap, from the Bond market, from the Stock market, even from the Real Estate market.

If it were to absorb much of that market cap it could reach $100T, leaving an approximate value of $5M per bitcoin.

But do you really think it can absorb so much market cap from other assets?

Total global wealth is around USD 420 trillion

Do you really believe that a quarter of all the wealth created in the world is going to be absorbed by Bitcoin? If we were talking about absorbing a total of $40T, then I would probably see it as much more realistic, and taking a long time to get there, but I don't know if people who are into Bitcoin end up having some sort of clinical bias.

Note: I am taking inflation into account here. If I talk about $5M it is with current prices, or the figure that will result in the future from multiplying that figure by inflation.