Despite Bitcoin (BTC) trading approximately 40% below its all-time highs and striving to maintain stability above the $70,000 mark, the long-term optimistic view on its value remains intact, particularly according to Matt Hougan, Chief Investment Officer at Bitwise Asset Management.
In a recent report titled “How Bitcoin Gets to $1 Million,” Hougan argues that Bitcoin is transitioning into an emerging store-of-value asset, serving a similar function to gold.
The Path To $1 Million
Hougan presents a straightforward method for estimating BTC’s potential value. The process involves gauging the size of the store-of-value market, determining Bitcoin’s share of that market, and then dividing by its capped supply of 21 million coins.
Currently, the total store-of-value market sits just under $38 trillion, consisting of approximately $36 trillion in gold and around $1.4 trillion in Bitcoin. As a result, Bitcoin currently commands slightly less than 4% of this market.
According to Hougan, this figure may lead many to believe that a $1 million price tag for Bitcoin is unrealistic, especially since, to reach that valuation, Bitcoin would need to capture more than 50% of the store-of-value market.
However, the executive notes an important aspect often overlooked: the store-of-value market is not static. It has seen substantial growth over the last two decades, and with rising concerns over fiat currency debasement, this trend is likely to persist.
Bitcoin’s Potential Growth
A key point in Hougan’s analysis is that the market for storing value is expected to expand dramatically. He predicts that within ten years, this global market could reach approximately $121 trillion.
Under this scenario, Bitcoin would only need to seize about 17% of the market to achieve a price of $1 million per coin. While achieving this level of growth—rising from around 4% to 17%—requires significant progress, it appears increasingly feasible given Bitcoin’s recent advancements, he said.
While Hougan acknowledges the optimism surrounding this prediction, he also highlights potential risks. If the global store-of-value market does not continue to grow as it has over the past two decades, there could be a downturn in gold prices. Furthermore, Bitcoin might struggle to capture additional market share.
Conversely, Hougan cautions that these projections might be too conservative. As concerns about rising government debt reach critical levels, the growth of the store-of-value market may accelerate, resulting in BTC obtaining a larger share than the anticipated 17%.
He emphasizes that the prevailing outlook—where both the store-of-value market continues to expand, and BTC increases its share—could imply significantly higher prices than today.
At the time of writing, BTC was trading at around $70,130, registering gains of 8% over the past two weeks, according to CoinGecko data.
Featured image from OpenArt, chart from TradingView.com
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