Why's Bitcoin stuck under $60,000? The gold market cap may hold the answer

[Cristiano]

After rallying more than 100% in 2021, Bitcoin (BTC) seems to be struggling to turn the $60,000 level into support. After all, what is so special about this magic round number and its accompanying $1 trillion market capitalization?

Gold's $11 trillion market cap might hold the answer, as Bitcoin's current trading volume and the amount held by institutional investors seem to match 10% of the precious metal's numbers.

Technical indicators and derivatives data provide interesting short-term insights. But to analyze cryptocurrencies in a broader context, one should focus on market capitalization, precious metals and global wealth.

More Bitcoins than in 2017
Keep in mind that the 18.67 million current BTC circulating supply is 11.2% more than existed in December 2017. Therefore, using unitary prices for longer-term comparisons can be misleading.


According to the above data, BTC's current $1 trillion market capitalization translates to roughly 10% of gold's, worth $11 trillion. To assess how those markets compare, one should compare their volume traded, ETF and ETN markets, in addition to institutional holdings.


At the same time, the daily volume for BTC is approximately $15.9 billion. Exchange-traded products such as Grayscale Bitcoin Fund (GBTC) add another $1.5 billion daily liquidity, according to CryptoCompare. Therefore, Bitcoin's $17.4 billion average daily volume can be compared to roughly 9.5% of gold.

Gold ETF vs. Bitcoin exchange-traded products
Bitcoin's multiple exchange-traded products such as Grayscale $GBTC and exchange-traded notes have been growing considerably. There are $58.7 billion assets under management, or AUM, locked in crypto exchange-traded products, according to CryptoCompare's March 2021 report.


With Bitcoin, addresses holding 100 to 10,000 BTC own 48.9% of the supply, equivalent to $538 billion held by large investors.

Considering institutions' gold holdings amount to $4.41 trillion, BTC displays a 12.2% equivalent indicator, thus supporting its current $1 trillion market capitalization.

Yassine Elmandjra, a crypto asset analyst at Ark Invest, believes Bitcoin has the potential to surpass gold's $10-trillion market cap. As Bloomberg senior commodity strategist, Mike McGlone puts it:

"Bitcoin fills the digital reserve-asset need in a low-yield world."
McGlone goes further, however, adding that "adoption of the benchmark crypto as a global reserve asset has crossed the mainstream threshold," which could propel BTC price to as high as $400,000 in 2021.

So to sum up, Bitcoin's average volume traded and large investors' holdings roughly match 10% of gold's markets. But while the $1 trillion market cap level may be a watershed moment for the next phase of Bitcoin adoption, BTC may remain pinned below $60,000 for quite some time, particularly as some analysts believe the price may only see a major surge toward the end of the year.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.

Why's Bitcoin stuck under $60,000? The gold market cap may hold the answer
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