Bitcoin's market cap now higher than 9% of global Banking sector

The growth of Bitcoin’s market capitalization positions the asset to rival the global banking sector’s cumulative value. In comparison, the growth of Bitcoin has seen its market cap equate to almost 10% of the global banking sector, a major milestone. 

Data presented by cryptocurrency trading simulator Crypto Parrot indicates that Bitcoin’s market capitalization of €0.56 trillion as of January 19, 2021 accounts for about 9.2% of the market cap of the global banking sector. As of Q4 2020, the global banking sector market cap stood at €6.1 trillion. 

Between Q1 2019 and Q4 2020, the global banking sector market cap dropped by 14.08%. As of Q1 2019, the value was at €7.1 trillion, while in the last quarter of 2020, the market cap was at €6.1 trillion. However, the value increased between Q3 2020 and Q4 2020 by 17.6%. 

Both Bitcoin and banks rally from Q3 2020

Accounting for almost 10% of the cumulative global banking sector market capitalization is a significant milestone for the asset as it pushes for mainstream adoption.

Both Bitcoin and global banks have witnessed a tremendous surge in market capitalization from Q3 2020. Towards the end of 2020, the banking and financial sector in general recovered from the effects of an economic turmoil mainly caused by the coronavirus crisis. The successful deployment of vaccines has also acted as a significant boost for the sector leading to their stocks rallying. Furthermore, the returning to the norm in the U.S. political scene has also worked as a catalyst for the market cap’s growth.

On the other hand, Bitcoin largely remained resilient throughout the last year amid the coronavirus pandemic. From March, at the onset of the pandemic, Bitcoin value has surged by over 500%. Bitcoin hit an all-time high of over $41,000 on January 8, 2021. By 2020 Q3, the asset embarked on a major rally. The rally’s driving force is investors’ desire to seek an alternative asset that is decentralized and not tied to any central bank. 

Though some banking stocks plunged amid the pandemic, and the U.S. dollar’s weakness gave Bitcoin an unfair advantage, making it a go-to destination for new and established investors. Amid the price surge, central banks rolled out stimulus packages raising fears of fiat devaluation. 

Bank’s still superior to Bitcoin

Worth mentioning is that the comparison in market cap for Bitcoin and banks might be unfair considering the banks have trillions in assets under management, and they also pay dividends. However, Bitcoin can be considered as an asset similar to stock since the holder can also benefit from rising usage, which comprises rising demand. 

Although Bitcoin’s market capitalization will likely eat into the bank’s value, the traditional lenders are unlikely to disappear. However, the entry of institutional investors has now seen some traditional banks establish crypto-related services.