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As Bitcoin (BTC) broke through the $ 14,000 level, its market capitalization exceeded the Russian ruble’s monetary base. This measure includes both physical currency and bank reserves, which are typically held by a country’s central banks.
The chart above may seem complicated at first glance, but it simply compares Gold, Silver, Bitcoin, and the remaining global currency bases. We can see that the United States has $ 4.9 trillion in physical notes, coins and bank deposits stationed at the Federal Reserve. Dividing that number by the 18.5 million BTC currently in circulation, we reach the $ 263,000 shown above.
In order for Bitcoin’s market cap to match the US base currency figure, the price would have to exceed $ 263,000. While it may seem far-fetched, BTC has already eclipsed several sovereign currencies like the Brazilian real, Swedish krona, and South Korean won.
This move is no small feat for a cryptocurrency that is only 11 years old. According to Fernando Ulrich, the economist behind Crypto Voices, the top 30 competitors to core money cover 95% of GDP. Apart from the euro which covers many countries, some of the top 113 countries peg their currencies to the US dollar.
Crypto Voices researchers concluded that:
“Until now, the money monopoly ‘works’ for central banks and their governments. It is virtually free of charge: fiat has been shown to be virtually ‘free’ by the market value of gold.”
The researchers elaborated by saying:
“As for #bitcoin, if and when it gets big enough to be on this chart and / or held by central banks, then and only then will we have any idea of what bitcoin is ‘costing’ central banks. “
Some might interpret the analysis as bearish, but it’s actually the opposite.
Crypto Voices researchers deduce that, so far, central banks and governments have maintained their ability to print money regardless of their holdings of gold. Therefore, there is no pressure to search for a new “gold standard” or something similar from a distance.
As the researchers perfectly summarize, inflation is gradually depreciating fiat currencies. This caused Bitcoin to outperform a number of currencies as they succumbed to overprinting. In fact, 2020 saw the biggest global expansion in core silver on record.
As made clear above, the global money supply grew by $ 5.5 trillion in 2020. That’s a 28% expansion, while Bitcoin maintained its halving schedule, cutting its emissions by 50%. .
Looking forward to
The big question on the minds of investors is will Bitcoin’s stock-to-flow model prevail? According to some critics, there are several flaws in the assumption that BTC will hit $ 100,000 and above in 2021 and beyond.
The ruble fell, along with many other sovereign currencies, so now all eyes are on the Canadian dollar. As shown in the fiat base money supply chart, the base currency of the Canadian dollar stands at $ 335 billion, which is equivalent to a Bitcoin price of $ 18,000.
The views and opinions expressed herein are solely those of author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You need to do your own research when making a decision.
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