Bitcoin Is 3rd Largest World Currency by Market Cap

Since its creation just over a decade ago, Bitcoin (BTC) has seen its price climb from practically nothing up to its current value of over $58,000.

In that time, Bitcoin’s market capitalization—its circulation supply multiplied by the value of each unit—has skyrocketed to top $1 trillion, making Bitcoin not only the largest cryptocurrency, but also larger than most government fiat currencies.

Bitcoin is now the No. 3 world currency by market cap, Deutsche Bank pointed out in a new research note this week entitled, “The Future of Payments: Series 2: Part III: Bitcoins: Can The Tinkerbell Effect Become a Self-Fulfilling Prophecy?”

Although Bitcoin and fiat currencies aren’t exactly an apples-to-apples comparison in terms of how the circulating value is calculated, we can roughly estimate where Bitcoin sits in the world currency rankings by comparing its market cap to the value of total banknotes in circulation for the fiat currencies.

As Deutsche Bank writes, “In terms of total currency in circulation, Bitcoin is the third-largest in the world, after the US dollar and the euro. This is mainly due to the vast increase in Bitcoin’s value recently. In early 2019, Bitcoin represented ‘only’ 3% of the US dollars in circulation, but in February 2021 it surged beyond 40% of the US dollars in circulation.”

Of course, this is dependent on Bitcoin’s current price, which fluctuates constantly. As DB declares, in a sub-heading that prompted many headlines this week: “Bitcoin is here to stay and its value will remain volatile.”

(There’s another caveat: DB notes that these conclusions “would change dramatically if we looked at monetary base, or M1 or M2, to define the universe of USD in existence. Just the amount of cash/coins printed appears small, as it does not include all the assets held in USD in deposits at banks.”)

Where Bitcoin fits into the world currency rankings

The US dollar (USD) is still by far the largest fiat currency by circulating supply and market value. DB puts its total value at $2 trillion.

According to the US Federal Reserve, there is $1.8 trillion worth of Federal Reserve notes and coins in circulation—more than three-quarters of which is made up of $100 and $20 bills.

Next up is the Euro (EUR)—a relatively new currency that first launched in 2002 and is now used throughout much of Europe and by most EU member states. DB pegs the Euro’s circulation value at at about $1.7 trillion.

After the Dollar and the Euro comes Bitcoin, then the Japanese Yen, Indian Rupee, Bitcoin back in 2018 at its pre-2020 peak, and then:

(ETH) right now.

But transaction volume is a different thing entirely from market cap.

DB notes: “Bitcoin transactions are growing, but not as exponentially as its market cap. Currently, Bitcoin transactions average about 0.5 billion per day, which is minuscule. This is only 0.02% of the euro and 0.009% of transactions in dollars. The average daily traded value for USD is 5.8 trillion and for the euro is 2.1 trillion, according to the 2019 BIS triennial FX survey. Thus, Bitcoin is comparable to the smallest currencies. Bitcoin’s liquidity is much closer to the Thai baht.”