Financial researcher Nic Carter has run the numbers and found that Bitcoin volume has surpassed the over the counter (OTC) gold market so far in 2018. The OTC gold market is on track to settle USD 446 billion of transactions in 2018 while the Bitcoin market is on track to have a volume of USD 1.38 trillion in 2018, using simple extrapolation.
So, not only has Bitcoin’s volume surpassed the global OTC gold market, it has surpassed it by about 200%. This is a good indicator that Bitcoin has become a major asset class.
Conservatively, (adjusted estimates), Bitcoin has settled $848b this year, and is on track to settle $1.38T. Bitcoin, it appears, has quietly surpassed the OTC gold market in settlement volumes.
— nic carter (@nic__carter) August 12, 2018
Carter used gold clearing statistics from the London Bullion Market (LBMA) which includes HSBC, ICBC Standard Bank, JP Morgan, Scotiabank, and UBS to arrive at the USD 446 billion OTC volume projection for 2018. In general, gold OTC volume is less than USD 30 billion per month, and silver OTC volume is less than USD 5 billion per month. According to CoinMarketCap, Bitcoin has a volume of USD 136 billion in the past month, and this does not include derivatives exchanges like BitMEX which actually have nearly as much volume as all the Bitcoin spot markets combined.
There is a caveat to this since total gold volume might be far higher than OTC markets due to paper gold. On markets like COMEX, paper gold is issued, which can be redeemed for the actual precious metal stored in a vault. However, there is only a tiny fraction of actual reserves in the vault backing the paper gold. There are many different estimates for the ratio of paper to metal stored in the vault, ranging from a 100 to 1 ratio all the way up to 1,000 to 1. Regardless of the exact number, the point here is most gold trading is done with derivatives that aren’t truly gold. This has saturated its market price and forced it to be far lower than it should be.
When it comes down to it, OTC gold market volume represents the true volume of physical trading, and Bitcoin has far surpassed it. This means there are more demand and activity associated with Bitcoin than physical gold.
As written in a previous article on Bitcoin News, Bitcoin is better than gold as a currency since it is far more liquid and far more secure. This makes Bitcoin much better for international commerce and finance than gold. It appears the market agrees with this, based on the global data.
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