Kim based the analysis on gold and credit default swaps (CDS)-related data, noting that Bitcoin also provides investors “value storage” and “decentralization.”
The expert noted that Bitcoin is “easier to trade and store than gold.”
“In the modern era, a time when transactions between countries and individuals are increasing fast, [the crypto market] could potentially expand in size to outgrow the gold market.”
Kim Yu-min, Researcher at Hanwha Investment & Securities
And Kim remarked that such assumptions were becoming more probable as politicians discuss the “possibility of using Bitcoin as a national reserve asset.”
Should Bitcoin’s popularity surpass that of gold and become a serious prospect for global central bank reserve funds and investors alike, the token’s “upside potential” could reach 577%, Kim wrote.
Furthermore, Kim said that “investors who hold US Treasury bonds buy CDS to hedge against the risk of the government defaulting and reduce their overall exposure to the US economy.”
Bitcoin and the wider crypto market are nursing sharp losses for the month so far even as global stocks rebound toward record highs https://t.co/6qQ3hByW2D
— Bloomberg (@business) August 19, 2024
These transactions, Kim explained, function “similarly to Bitcoin in terms of hedging central bank risk.”
US Debt and BTC State Adoption – ‘Key Factors’
The analyst included calculations about the size of US government debt increases until 2034, forecasting that it could rise to $600 billion in 2034.
Bitcoin investment could help hedge the risks of a US government default, Kim said. However, the expert noted that “other assets exist” and that BTC price rises could be as little as 162% in the next decade.
International firms are experiencing a DEMAND SLOWDOWN in China. No surprise.
China’s MONEY SUPPLY (M2) is growing at only 6.2%/yr. That’s far below Hanke’s Golden Growth Rate of 11%/yr, a rate consistent with hitting China’s inflation target of 3%/yr. https://t.co/0waHDVyW6C
— Steve Hanke (@steve_hanke) August 19, 2024
However, Kim suggested that the health of the US economy would not be the only factor in BTC price rises in the decade ahead.
The analyst said that there was “a possibility that countries with [poor] currency stability could adopt Bitcoin as a legal tender.”
“Bitcoin has the potential to lower remittance fees and increase accessibility to financial infrastructure.”
Kim Yu-min, Researcher at Hanwha Investment & Securities
Kim claimed that “if we assume that 10% of the annual $1.6 trillion M2 supply flows into Bitcoin over the next 10 years, the coin’s upside potential is 642%.”
Economists use the term M2 to refer to the amount of a country’s cash that its citizens have either in their possession or in short-term bank deposits.
Regulators in Argentina earlier this summer held talks with their counterparts in El Salvador about the latter’s experience with BTC adoption.
However, thus far El Salvador remains the only nation in the world to have taken BTC adoption to this kind of level. The country officially adopted Bitcoin as legal tender in September 2021.