Bitcoin market cap exceeds base money supply (M0) of UK and Russia combined

Bitcoin is now more liquid than the cash supply of the global reserve currency, the British pound (GBP).

According to the Bank of England, the current M0 circulation in the UK is 88 billion pounds, equivalent to 116 billion US dollars.

Bitcoin’s market capitalization has grown to $287 billion. This means that digital cash is now more liquid than paper notes of the top global reserve currency.

M0 million supply of GBP in November 2020

M0 is the reserve currency or base currency on which other currencies are settled, usually banknotes in circulation, and for the UK, M0 is always on the small side.

If we compare M0 to the banknotes in an ordinary person's pocket, the M0 of an American is a $100 bill, the M0 of a European is a 500 euro bill, and the M0 of a British person is about 20 pounds.

So in reality M0 is less money reserves than other types of money supply, but when we use M1 supply, which includes bank deposits (such as digital fiat currencies), the number increases to £2 trillion, or the size of the economy.

This is somewhat similar to Germany's M1 supply of 2.5 trillion euros, interestingly Germany does not disclose its M0.

Israel also doesn’t reveal its M0, but it does show its M1, which is much lower at just $158 billion in Bitcoin compared to Bitcoin’s market cap of around $300 billion. Israel is a relatively small economy at only $400 billion, so it can’t exactly back a national reserve currency, but Bitcoin seems big enough now that perhaps these small countries could start using Bitcoin as a reserve currency.

The market value of Bitcoin is now much larger than the reserve currency of Russia, the largest country on land.

Russia’s M0 supply in November 2020

Russia has about $12 trillion in paper money and reserve currencies, but that only translates to $156 billion.

Therefore, if we add Russia and the UK’s M0, Bitcoin’s current market capitalization is still ahead of the M0 of these two countries combined.

This means that Bitcoin could currently account for the internal circulating supply of the roughly $4 trillion economies of Russia, the United Kingdom, or mighty Germany.

Since Russia’s M1 is not far away, it can almost support Russia’s reserve currency function, while for Israel, Bitcoin can perform all of the country’s monetary functions.

This means that developed economies can now operate on Bitcoin’s settlement layer, but obviously not very large economies like the US China or the EU.

However, Bitcoin has been growing rapidly and can now begin to be considered a contender for global reserve currency status. Its current market capitalization makes it the world’s eighth-largest base currency.

Of course, the US dollar dominates. So does the Euro to a large extent. Then there’s the fight for third place, but Bitcoin is nowhere near it.

The Japanese yen, British pound and Swiss franc, the latter of which has an M0 close to $1 trillion. The Chinese yuan could also be included, but it is too volatile for a realistic store of value.

Only when the market capitalization exceeds the M0 of these countries will Bitcoin become a real choice. Especially because its global nature and neutrality (like gold) further independence from the monetary properties of the seven countries mentioned above.

However, if Bitcoin reaches or exceeds $1 trillion and the volatility of its cycles is maintained, many people may even find it difficult to choose between the reserve currency function and store of value between the Swiss franc and Bitcoin .