Bitcoin’s supply is decreasing as the crypto becomes more popular

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The wealthy class is showing more interest in Bitcoin

Bitcoin has grown to become an attractive investment option over the years. The cryptocurrency is now even more compelling among the rich who are looking to purchase it. Celebrities from the entertainment industry, billionaires and renowned traders are all actively trying to get a piece of the dominant crypto whose appeal as a portfolio asset is growing by the day.

Its effectiveness as a portfolio asset has made it a hard to overlook option in the eyes of high-net-worth as well as institutional investors. But as the demand for the cryptocurrency is noticeably growing among institutional investors, its supply is declining. Not long ago, there were reports of a shortage of Bitcoin in the market. This was after PayPal and Square acquired large numbers of the cryptocurrency.

The leading crypto can afford portfolio protection from rising inflation similar to that of traditional safer assets like precious metals. However, there exists a potential for a rapid increase in value since bitcoin is even now considered a store of value that is still at a developing stage.

Analysts seem to agree that Bitcoin’s efficiency as a portfolio asset stems from its safe-haven characteristics. These characteristics are not only distinctive but also beneficial. For instance, the supply of BTC is capped at 21 million. This makes it safe from huge central bank liquidity injections.

However, it also falls short in a few other aspects. Case in point, its market capital is only a fraction of the market capital of gold, a common store of value. As of 3 December, bitcoin had a market cap of 350 billion. Gold, on the other hand, has a market capital exceeding 9 trillion – which is about 25 times more than Bitcoin’s.

In August, Anthony Pompliano posted a tweet that read, “Bitcoin’s market cap will surpass gold’s market cap by Dec 31, 2029. Posting this as a receipt for the future”. By this, he meant that Bitcoin would have a greater market cap than gold at that time. This is, however, just a prediction at the moment, and only time will tell how the two will perform.





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