The” Digital Gold” is in the process of displacing the actual gold from its coveted position as an investment instrument and a store of value. Bitcoin and more recently Ethereum have become the investors’ favorite following their stellar performance.

Thanks to the rapid growth of both cryptocurrencies this year, the digital currency market is witnessing a massive influx of funds. According to investment experts, the growth of cryptocurrency market is coming at the expense of gold. The shifting trend is further contributing to the meteoric rise of the cryptocurrency market as a whole.

A leading business magazine quotes Tom Lee, the managing partner and head of research at Fundstrat Global Advisors saying,

“Cryptocurrencies are cannibalizing demand for gold. Bitcoin is arguably becoming a scarcer store of value. Investors need to identify strategies to leverage this potential rise in cryptocurrencies.”

According to Lee, the reducing supply of cryptocurrencies in the recent months are contributing towards growing demand. At the same time, the supply of gold has increased in the past few years, establishing the highest production of 3,100 metric tons. However, the increased production of gold might not have any effect on reducing demand for the yellow metal in the market. Instead, it is the conscious choice of investors to put their money in digital currencies where the return on investment is more than that of any other conventional asset at the moment.

At the same time, Lee’s company forecasts Bitcoin price to see a huge appreciation in the coming years, reaching $20,000 by 2022. In the case of a continued bull run, the popular cryptocurrency can potentially increase to as high as $55,000 during the same period. But unlike Bitcoin, gold’s value is expected to remain relatively stagnant. Lee also touches upon the possibility of central banks buying into the digital currency, which could lead to a further increase in confidence among the investors, driving the demand and hence the price by many folds.

However, the likely scenario of the central banks buying Bitcoin is pretty thin at the moment. But if the total market capitalization of the cryptocurrency manages to hit $500 billion, then it’s a different story. Either way, almost all forecasts for Bitcoin price have been positive lately, and there is a high probability that they might come true.

Ref: Business Insider | Image: NewsBTC