Will Bitcoin ever cost 1 million dollars?
Let’s look at what will need to happen in order for it to reach this price.
A lot of people treat and talk about Bitcoin as a digital gold and hedge for inflation. We could get into a long discussion of how it should be treated but let’s assume that that’s what it is to simplify our calculations. According to Roberto Talamas calculations, the average annualized return of Bitcoin was 230% and more than 10 times more than any other asset.
Market cap is a term that describes the value of an asset based on its current price and circulating supply. Let’s have a look how much money is in the world and what would be a potential price of Bitcoin.
Figure 1: Growth potential
At a time of writing this guide the market cap of gold is worth around 11 trillion dollars. If Bitcoin could reach this cap it’s price would be 11x more than today or approximately $660,000. Other rows show how much Bitcoin would be worth by achieving a proportion of the asset.
How much will it take to get there? I wish I knew the answer to it but this financial revolution is happening right in front of our eyes. The rate of adoption is currently exponential and unprecedented. Bitcoin was recently adopted as the official currency in Salvador. Billions of dollars are invested and transferred on a daily basis using decentralized financial applications on Bitcoin and other platforms like Ethereum. Big financial institutions or tech companies like J.P Morgan or Tesla recently added exposure to Bitcoin as part of their investment portfolio. All of it is unprecedented. Let’s add to it inflation. USA and the rest world is struggling with keeping up with the highest inflation in decades. Why is it important? Most of the cryptocurrencies have fixed supply. For example Bitcoin is capped at 21,000,000 units. That means that there can be only 21 million people that can afford one full bitcoin. It’s extremely scarce compared to other assets. On the contrary fiat or monetary currencies can be printed in unlimited amounts. It’s estimated that the US government printed 40% of money in existence only in the last couple years! Printing bitcoin is mathematically impossible and as a scarce asset its value should continue to grow.
What’s the conclusion? No one knows the future but if the adoption of Bitcoin will get bigger so its appreciation and one day we might see a bitcoin worth 1 million dollar or more.
If you like this content and would you like to learn more please consider getting my book: Retiring with Bitcoin and Real Estate It covers many practical investment advises for combining investing in different assets classes.
Source: Retiring with Bitcoin and Real Estate https://www.amazon.com/Retiring-Bitcoin-Estate-Janusz-Chudzynski-ebook/dp/B0B84HFZFL
