If other countries follow, then some money currently locked in cryptocurrencies may flow into gold. Did a quick calculation on what may be the impact if this money flow into gold:
Market size of cryptocurrencies is $1T. My understanding is that the market size is usually a function of real money with 5 times multiplier i.e. $1T is 5 times the actual money of $200B invested in cryptocurrencies. If 10% of this "real" money ($20B) flows into gold, then the gold market will be inflated by $100B. The annual gold market size is ~$200B and the addition of $100B will boost up gold price by 50% within this year!! That would be very nice but I think I am being very optimistic and unrealistic!!
BTW on cryptocurrencies, I think China has no hesitation to ban cryptocurrencies because China is about to introduce the CBDC in a bit way and therefore there is no place for any competition. On the other hand, US FED is hesitant in introducing CBDC and that is because introduction of it will imply taking away a big chunk of the private bank revenues and will become less relevant. US FED is comprised of private bankers and therefore it does not serve the private banks well to introduce CBDC.
Above are just my opinions and therefore don't rely on them to divest in cryptocurrencies or invest in gold.
Cheers.
DCN Price at posting:
20.5¢ Sentiment: Buy Disclosure: Held
