Everyone knows that gold is one of the most valuable assets in the world, but how does it compare to Bitcoin? While precious metals have an extensive history of appreciation in value, Bitcoin, a popular digital cryptocurrency, recently began rivaling gold as a prime choice for investors.
Understanding an investment’s market capitalization helps you better understand how much potential for success your investment has, so it’s no surprise that one of the first questions that serious investors ask is how Bitcoin’s market cap compares to gold’s market cap.
What Is Market Capitalization?
Market capitalization (market cap) is a mathematical figure displaying a company’s—or a “store of value’s”—total value in stock market shares.
“Store of value” refers to any assets that consistently appreciate in value, such as precious metals or real estate. Typically, store-of-value items offer the most substantial investment opportunities letting you enjoy lower risks and stronger long-term rewards.
While the stock market isn’t the only indicator of a company’s success, it’s important since it displays growth and wealth. Comparing the market caps of Bitcoin and gold can help you gauge which may be more optimal for your investment strategy.
Importance of a Market Cap
Knowing a market cap helps you understand an investment opportunity’s size and performance, rather than just one or the other. Such information is necessary when considering where to invest. Using analytics can help determine whether or not a company performs well compared to its revenue and competitors.
The market cap also helps you understand an investment’s fluctuations over time. You can expect larger risks when an opportunity displays extreme market cap rises and falls. If you find an option that boasts steady market cap growth, your risks go down since you can rely on your investment to flourish with the company.
How Is a Company’s Market Cap Established?
Companies that sell public shares establish market caps to display their public performance and history. A simple mathematical formula lets everyone know how large the business is, how long it’s been around, and how it financially performs compared to competitors.
How To Calculate Market Cap
You can calculate market cap by multiplying a company’s total market shares by its price per share. For example, a company with 100,000 shares at $10 each would have a market cap of $1 million. Anyone can do this math to weigh investment or acquisition opportunities.
Some websites also provide real-time market cap data so you can compare different options. Market cap values update daily, so check the most current figures before making any decisions.
Four Market Cap and Investment Categories
Attempting to understand your calculated number would be challenging without any references. Because of this dilemma, companies use a measuring system to sort themselves into four categories: large, mid, small, and micro.
Large-Cap (Over $10 Billion)
Large-cap organizations or stores-of-values are the largest in the world, with market caps over $10 billion. Such businesses usually have extensive success histories, offering long-term capital gains. You might not see instant investment results with a large-cap company, though you should enjoy safe and secure long-term earnings.
Mid-Cap ($2-10 Billion)
Investing in a mid-cap company is a bit riskier but could offer faster returns. Mid-cap companies typically have market caps between $2 and $10 billion. While they might not have as much experience in the industry, most expect these businesses to experience exponential growth shortly.
Small-Cap ($300 Million to $2 Billion)
Companies with market caps between $300 million and $2 billion are small-caps. Usually, these businesses are either new to the market or only operate in a niche industry. Investing in a small-cap company is a considerable risk, only occasionally offering decent rewards, depending on your luck.
Micro-Cap (Below $300 Million)
Micro-cap companies have market caps below $300 million, making them the smallest and riskiest contenders. Most experts advise against investing in micro- and small-cap companies. Mid- to large-cap organizations offer fewer risks and more dependable rewards.
While younger companies tend to fall on the smaller end, that’s not always the case. Sometimes a small company could explode with success, reaching large-cap status rapidly.
Always practice caution when investing in anything new. While it may be popular now, it’s hard to say how well the company will do in the next few years. Organizations with extensive success records are less risky and more likely to fund your future.
Market Capitalization of Gold
The market capitalization of gold ranks the highest among all stores-of-value investment opportunities. For centuries, people used gold and other precious metals as national currencies for trading, collecting, and determining value. Today, this asset remains an incredible investment opportunity due to its limited supply and steady appreciation rates.
What Is the Market Cap of Gold?
The market cap of gold is $11.26 trillion, making it the top store of value in the world.
With gold, you can remove the risks and feel confident in your investment, knowing that you’re selecting something that nearly always increases in value. Investing in a physical and rare asset like precious metals is usually safer and more dependable than anything digital.
Why Will Gold Always Have a High Value?
The United States experiences economic downfalls and depressions every few decades. Each time it happens, gold remains a rock that people depend on to keep their hard-earned savings safe from inflation.
Aside from the United States, gold remains a worldwide power player. Bullion was a popular trading currency around the globe for centuries. Even today, you can walk into just about any pawn shop to sell your gold for top dollar.
People worldwide desire gold for investment diversification, style, and luxury needs. Market experts understand that when other stocks crash, gold always continues flourishing. When all others fail (crypto included), gold will remain valuable.
Market Capitalization of Bitcoin
Understanding the difference between the market caps of Bitcoin and gold will help you place each into perspective. While Bitcoin might display recent explosions in value, gold offers a much longer and richer history of success. The cryptocurrency market is relatively young and can’t offer the same dependability as precious metals.
What Is the Market Cap of Bitcoin?
Bitcoin’s market cap is currently $423.65 billion, categorizing it as a large-cap investment. While this number might sound significant, digital assets—especially crypto exchanges—display increased risks due to frequent value fluctuations.
To put it into perspective, if Bitcoin were ever to reach the market cap of gold, one BTC (bitcoin) would cost $400,000. Right now, one share costs $22,289.
Remember that the numbers above only reflect the current market cap of Bitcoin for today. Bitcoin, like other digital currencies, fluctuates substantially. Some projected spikes display it reaching a market cap of $1 trillion, though it drops to underwhelming numbers just as frequently.
Could Bitcoin Ever Reach Gold’s Market Cap?
Considering the crypto market cap as a whole (not just Bitcoin), it’s already closely rivaling precious metals. With a $2 trillion market cap, cryptocurrency isn’t far from gold. Many believe that diversifying their investments between cryptocurrencies and gold could offer the best widespread opportunities with reduced risks and optimal rewards.
Many financial experts predict that Bitcoin will take over the market soon. Currently, digital currency carries a “store of value” market share of 20%, though Bitcoin could reach 50%, creating enormous rippling effects across the entire stock market.
Many believe that the only way for Bitcoin to reach the market capitalization of gold is if investors begin treating it the same way. Gold offers a physical asset, while Bitcoin only provides limited virtual coins in circulation, making many skeptical of this non-tangible investment. If investors fully realize Bitcoin’s potential, it might gain more traction.
Why Has There Been a Spike in Bitcoin’s Market Cap?
Bitcoin recently spiked for a few reasons. First, Bitcoin has a limited supply of digital currency, making it rarer than other cryptos having unlimited supplies. Currently, 18.9 million of the 21 million bitcoins available have been purchased.
With inflation climbing to all-time highs, Bitcoin also acts as a hedge for many wishing to beat the economic downturn. In 2021, Bitcoin saw better success than gold, though this spike still didn’t allow it to take the long-reigning top position.
Bitcoin could be the future, though we can’t know for sure. Bitcoin and other cryptos are gaining popularity, yet they haven’t reached the multi-trillion level of gold.
Even if Bitcoin reaches or exceeds the market cap of gold, remember that this success is young and might not last long. We recommend choosing gold as a solid, dependable, and risk-free investment.
Start Investing In Gold With Noble Gold Today
It’s never too late to begin investing in your future, and understanding market caps can open the door for you to start planning. Gold has been around for centuries and is unlikely to disappear soon. At Noble Gold Investments, we help you make the most of your gold and silver investments with a gold IRA or silver IRA. You don’t want to reach retirement age and have nothing to fall back on.
A Gold & Silver IRA is a great way to invest in precious metals safely for the long term. The precious metals experts at Noble Gold Investments are ready to help you make the most of your money. Call our experienced team today at (877) 646-5347 to begin discussing your options! Let us show you how our years of expertise can reward you in the long haul.