Bitcoin at $1 Million is Becoming A Lot More Realistic
The $1 million price target for bitcoin isn’t crazy. Here are some data visualizations to make the case.
The $1 million price target for bitcoin isn’t crazy. Here are some data visualizations to prove it.
Bitcoin needs to grow 1000% to reach $1 million. Can it get there?
Recently, I stumbled upon some visualizations by Visual Capitalists that demonstrate how much cryptocurrencies are still in their infancy stages compared to other asset classes around the world. Despite being two years old, I found them so compelling I had to write about them. It’s these kinds of exercises that make me believe that a $1 million price target for bitcoin is not inconceivable in the next few years, and might even be inevitable.
Working as a financial analyst in my early twenties, I often found it brash, cocky and irresponsible of day traders who talked about 1000% returns and derivative option bets that yielded them $10 grand in a few days. It was hard for me to believe—adjusted for risk— that these were smart investments. Most investors know that stock markets especially are actually quite efficient (assuming there is high liquidity) and big price corrections are really rare and hard to predict.
However, the $1 million price target for bitcoin needs to be taken a lot more seriously. Crypto was easily the best performing major asset class over the past five years, and many believe the trend will continue for another decade or longer. The Senior Vice President of IBM, Jesse Lund, made a similar $1 million prediction at the Think Conference in February:
It is clear that Bitcoin adoption curve is on the right track. Regulators are thawing, and as the Lightning Network gain traction, it is the borderless BTC that will draw demand… I have a long-term outlook. It goes back to that discussion about the utility of the network at a higher price. I see Bitcoin at a million dollars someday. I like that number because if Bitcoin’s at a million dollars, then the Satoshi is on value parity with the US penny.”
Another leading mind in crypto is Jesse Powell, CEO of US-based crypto exchange Kraken, who raised $100 million in venture funding in February 2019 and then another $13 million in June 2019 from its own customers. Powell has a similar price target that is in the 10–100X range—which says a lot considering Kraken is almost 10 years old and has survived many market crashes and recoveries.
It’s not inconceivable that the world’s first open, secure, unregulated, public, borderless, apolitical and decentralized cryptocurrency will surpass every other fiat currency one day, even the mighty dollar, and there will be a new standard for currency in the global financial markets.
One-Hundred Billion
For this exercise, we will be using $100 billion as our benchmark. If you want a visualization of how much money $1 billion is, click here.
Global Real Estate
All the world’s developed real estate—including industrial, agricultural and commercial land—equals $217 trillion.
Global Money Supply
All the world’s coins, banknotes, checking accounts, savings accounts and investment funds equal $90.4 trillion.
Global Stock Market
All the stocks in the stock market equal $73 trillion.
World Gold Reserves
All the above-ground gold in the world using a spot price of $1,275/oz would value the world’s gold at $7.7 trillion.
Global Currencies
All the physical currencies in the world (coins and banknotes) combined equals roughly $7.6 trillion.
World’s Biggest Companies
Apple and the other largest 10 companies in the world (most in the USA) are worth less than $6.5 trillion collectively.
World’s Richest People
The combined wealth of Gates, Bezos, Buffet, Zuck and the other top 50 richest people in the world equals $1.9 trillion.
California’s GDP
The entire Gross Domestic Product (GDP) of California equals $2.9 trillion, larger than most countries.
Cryptocurrencies
The entire market cap of global cryptocurrencies is $385 billion, with bitcoin accounting for $210 billion (at the time of writing).
There is $100 trillion in fiat money circulating around the globe, with 1% of that in USD. If bitcoin passes the greenback as the worlds #1 reserve currency, then bitcoin’s total market cap would reach $1 trillion. With bitcoin already at 0.1% global adoption, this would represent 10X or 1000% growth which is not crazy, and wouldn’t be the first time its posted returns like this.
With only 20 million bitcoin in circulation, each bitcoin would be worth $50,000; at 5% each bitcoin would be worth $250,000; at 10% each bitcoin would be worth $500,000; and at 20% global adoption, bitcoin would finally hit the $1 million mark and would probably keep going.
My Conclusion
tldr; hold onto your bitcoin.
Bitcoin does not follow any of the conventional rules of other asset classes, nor does it follow conventional patterns (like quarterly earning calls). It has a blatant disregard for government policies, and it is infinitely scalable and global in scope by its very nature.
Any money that is being converted away from one of the asset classes on this page and into bitcoin or another cryptocurrency will contribute in a small way to the rise to $1 million. As a fun exercise, visualize one or two colored dots on this page — each representing $100 billion in market cap — and ask yourself if you could see it being converted away from that industry and into bitcoin or another cryptocurrency in the near future. This could be real estate property, stock or mutual funds, silver or gold jewelry, cash reserves (Apple), grants from wealthy philanthropists, farmland, government subsidies, paychecks, tax refunds, and many other assets.
Personally, I see bitcoin wiping out a much larger percentage of this map than 1%. It will succeed because people around the world want it to succeed.