How Could the Bitcoin (BTC) Price Reach the $1 Million Level?

The question “Could Bitcoin reach $1 million?”, which has been debated for a long time in the cryptocurrency market, has resurfaced.

Matt Hougan, Chief Investment Officer (CIO) of multi-billion dollar asset manager Bitwise, said that Bitcoin reaching $1 million is not as unrealistic as it seems and that investors are making a fundamental mistake in assessing this potential.

According to Hougan, many investors assume the market is static when analyzing Bitcoin’s value. However, the most accurate way to evaluate Bitcoin is to consider it as a “store of value” and calculate the size of this market and Bitcoin’s potential share of it. Hougan states that Bitcoin functions similarly to gold in this respect; it offers a means of storing wealth outside the traditional financial system, but in a digital form.

Hougan states that the global store of value market is currently worth approximately $38 trillion, with about $36 trillion of that being gold and $1.4 trillion being Bitcoin. According to this calculation, Bitcoin currently represents only about 4% of the total market. Assuming the current market size remains constant, Bitcoin would need to capture more than 50% of the market to reach $1 million, which seems quite difficult.

However, according to Hougan, what investors are overlooking is the significant growth this market has experienced over time. For example, when the first gold ETF was launched in the US in 2004, the global gold market was worth approximately $2.5 trillion. Today, that figure has reached approximately $40 trillion. This indicates an annual compound growth rate of about 13%. Hougan points out that factors such as increasing public debt, geopolitical risks, and expansionary monetary policies are supporting this growth, and he predicts that if similar trends continue, the store-of-value market could reach approximately $121 trillion within the next 10 years.

In this scenario, Bitcoin would only need to capture 17% of the market to reach the $1 million mark. According to Hougan, this percentage is not an impossible goal given Bitcoin’s progress in recent years.

Hougan points out that institutional adoption of Bitcoin is rapidly increasing. While a few years ago Bitcoin ETFs didn’t exist in the US and most institutional investors hesitated to include Bitcoin in their portfolios, today Bitcoin ETFs are among the fastest-growing ETFs in history. Large investors, such as Harvard University’s endowment fund and Abu Dhabi’s sovereign wealth fund, are also known to be investing in Bitcoin. Furthermore, the decrease in Bitcoin’s long-term volatility has led professional investors to consider allocating up to 5% of their portfolios to Bitcoin.

However, Hougan also emphasizes that this scenario is not entirely free of risks. The projection could be weakened if the store of value market does not grow at the pace it has in the last 20 years, or if Bitcoin fails to gain the expected market share. But according to Hougan, the opposite scenario is also possible: with the growth of global debt problems, demand for store of value assets could increase even further, and Bitcoin could gain a larger share than expected.

*This is not investment advice.