Bitcoin’s market capitalization is rapidly outpacing the monetary base of multiple national currencies and the Canadian dollar appears to be next.
When Bitcoin (BTC) surpassed the $14,000 level, its market capitalization exceeded the Russian rouble’s monetary base. This measure includes both physical currency and bank reserves, which are usually held by a country’s central banks.
It’s believed that Bitcoin’s market price will match the world’s major monetary bases.
The above graph may seem complicated at first glance, but simply compare the gold, silver, Bitcoin and the remaining global monetary bases. We can see that the US has USD 4.9 trillion in physical bills, coins and bank deposits parked in the Federal Reserve. Dividing this number by the current 18.5 million outstanding BTCs, we arrive at the USD 263,000 indicated above.
For Bitcoin’s market capitalization to match the U.S. base money figure, the price would have to exceed USD 263,000. While this may seem far-fetched, BTC has already eclipsed several sovereign currencies such as the Brazilian real, Swedish crown and South Korean won.
Bitcoin Sets Record for Russian Rouble
This movement is no small thing for a cryptomonkey who is only 11 years old. According to Fernando Ulrich, the economist behind Crypto Voices, the top 30 base currency competitors cover 95% of the GDP. Aside from the euro that covers many countries, some of the 113 major ones link their currencies to the US dollar.
Crypto Voices researchers concluded that:
„So far, the money monopoly ‚works‘ for central banks and their governments. It is virtually cost-free: fiat money has proven to be almost ‚free‘ of restrictions on the market value of gold.
„As for #bitcoin, if it becomes large enough to be on that chart and/or in the hands of central banks, then and only then will we have any idea what bitcoin ‚costs‘ central banks.
Some might interpret the analysis as being bearish, but in reality it’s the opposite.
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Crypto Voices researchers infer that, until now, central banks and governments have maintained their ability to print money regardless of their gold holdings. Therefore, there is no pressure to seek a new „gold standard“ or anything remotely similar.
As the researchers perfectly summarize, inflation depreciates trust currencies little by little. This caused Bitcoin to outgrow a number of coins as they succumbed to overprinting. In fact, 2020 had the most extensive global monetary base expansion ever recorded.