Inflation games: Bitcoin competes with fiat on value but lacks volume

While fiat currencies buckle under economic strain exacerbated by the coronavirus pandemic, Bitcoin has continued on its upward trajectory for most of 2020.

Despite being the most gold-backed fiat currency in the global market, the Russian ruble now has a lower monetary base than Bitcoin.

"We could see Bitcoin surpass other major fiat currencies, but it depends on how one measures the size of an FX market. The New Zealand Dollar is at the lower end of the group and the most susceptible to being passed by Bitcoin but currently sees over $100 billion in daily trading volume, which is well above that of Bitcoin. Unlike other hard money assets, Bitcoin does see high trading turnover, so even at a modestly higher market cap, Bitcoin's notional trading volume could be quite a bit higher than it is today."Bitcoin shines as global economy stutters.

The parabolic advance required to propel Bitcoin to such heights would also place BTC firmly in the same category as gold - as a bonafide store of asset value.

In exactly eight months since then, BTC's price is up over 300%. Commenting on the possibility of Bitcoin reaching a new all-time high in the short term, Todaro remarked that it will be tough to establish a sustained push toward the record before the end of 2020, adding further: "This bull cycle should bring us well beyond prior ATHs on a longer-term basis and with government spending increasing and the May halving behind us, we are set up for one of the most attractive bullish periods in Bitcoin's history."

Joe DiPasquale, the CEO of crypto hedge fund BitBull Capital, also sees Bitcoin setting a new all-time high during this current bull run, telling Cointelegraph: "It is very likely since Bitcoin has now crossed $16,000, which was a key resistance level. $20,000 is not that far off from this point unless any major negative developments impact the market in the short-term."

While inflation remains a real concern for many countries, 2020 has been a pivotal year for Bitcoin in terms of supply dynamics.

Recognizing the declining value of cash holdings, some companies are already pivoting to Bitcoin as a treasury reserve asset.

While Bitcoin retains certain characteristics pertaining to currencies, the lack of supply caps for fiat makes any attempts to draw comparisons between both somewhat problematic.

"Bitcoin surpassing fiat currencies is not a metric we should focus on since fiat currencies have no circulation limits as such. Instead, market cap is a better metric, and Bitcoin is now among the top-20 assets."Economic downturn likely difficult to reverse.