How Much of the World's Money Is in Bitcoin?
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- Global wealth is estimated at just over $1 quadrillion, while Bitcoin's market cap is just under $300 billion. Bitcoin thus represents 0.03% of global wealth.
- Like gold, Bitcoin, is considered by many investors as a hedge against government policies such as quantitative easing, capital controls, and negative interest rates. Like gold, Bitcoin is a non-national currency.
Bitcoin’s Market Capitalization
The market capitalization or market cap of an asset is the total value of all of its outstanding shares. The market cap of a given asset is thus the product of the total supply of shares and the price. At the time of writing, there exist approximately 18.5 million bitcoin at a price of $15,700, yielding a market capitalization of roughly $300 billion.
How Much Would It Cost to Buy All Existing Bitcoin
Market capitalization is a useful and common metric for measuring an asset’s relative size, but it is not an accurate measure of the cost of the entire asset. Although Bitcoin’s market cap is currently around $300 billion, it would be impossible to purchase all existing bitcoin for $300 billion. This is due to the fact that not every holder of Bitcoin is willing to sell at the currrent price point. Additionally, many bitcoin are thought to be lost forever by people who lost their private keys or died. Satoshi Nakamoto, Bitcoin’s creator, disappeared in 2011, possibly leaving over 1 million bitcoin unspendable. These lost coins are still counted by most market cap calculations.
If an entity with $300 billion decided to attempt to buy the entire supply of bitcoin, they could place an order to buy $300 billion worth of bitcoin at the current price of $15,700. All orders to sell bitcoin for $15,700 would be executed. After that, the buyer would be forced to raise their price and buy out all holders willing to sell at $15,701. This process would continue at an accelerating pace, and the price of Bitcoin would skyrocket. Each bitcoin purchased by the buyer would come at a higher price, until their $300 billion was exhausted.
How Much of the World’s Money Is in Bitcoin?
In the scope of the world’s wealth, the value held in Bitcoin is miniscule. The global equities market represents some $90 trillion in assets—gold, silver, and other precious metals account for another $12 trillion. The world’s total M2 money supply—all the physical cash in circulation plus deposits, promissory notes, and other liquid money instruments—is upwards of $40 trillion. Global real estate accounts for $30 trillion in assets. When you include other forms of investment, global debt, and financial derivatives, the world’s total wealth tops at somewhere just over $1 quadrillion or $1,000,000,000,000,000.
If we assume that this quadrillion roughly represents the total value of assets in the world, then Bitcoin represents 0.03% of all wealth in existence.
What Drives the Price of Bitcoin?
Many factors influence Bitcoin’s price, and there are a variety of players with skin in the game, from high net-worth traders to smaller holders. One of the primary drivers for growth since Bitcoin’s 2017 bull run has come from the expectation that Bitcoin could be a hedge against monetary inflation and centrally planned economies.
Ultimately, Bitcoin’s price is determined by the same market factors that determine any commodity or asset price: supply and demand. As more users enter the network and its market, the price theoretically should rise over time, given Bitcoin’s scarcity. Only 21 million will ever be minted, and the annual inflation rate—how many are minted each year—is cut in half roughly every four years.