Bitcoin could hit $1 million in 10 years if it does, says Bitwise CIO Matt Hougan

Key words

• Bitwise CIO Matt Hougan says Bitcoin could hit $1 million in 10 years.

• Bitcoin ETFs have returned to net flows.

• Some analysts predict big upside for Bitcoin, but others, like Arthur Hess, remain cautious.

Bitcoin could reach $1 trillion in the next decade if it gains a small share of the rapidly expanding global store-of-value market, Bitwise Chief Investment Officer Matt Hougan said in a recent investor note.

The forecast indicates a nearly 14-fold increase from current levels, as Bitcoin was trading at around $69,610, down less than 2% over the previous week.

Hogan said Bitcoin should be evaluated as a digital store-of-value asset that essentially competes with gold.

Using this framework, he said that the long-term price of Bitcoin can be estimated by calculating the size of the global store-value market, determining Bitcoin’s share of that market, and dividing the resulting value by Bitcoin’s fixed supply of 21 million coins.

According to Bitwise estimates, currently, the retail market is worth just under $38 trillion, including about $36 trillion in gold and nearly $1.4 trillion in Bitcoin.

This means that Bitcoin represents a little less than 4% of the market today.

At that market size, Bitcoin would need to capture half of the market by value to reach $1 million per coin — an outcome that Hogan acknowledged would be difficult.

However, he said a key assumption that is often overlooked is that the market itself has grown significantly over time and may continue to grow.

Hogan pointed to the rise of gold over the past two decades.

Around the time the US gold exchange-traded fund launched in 2004, the total gold market was worth about $2.5 trillion.

It has since expanded to nearly $40 trillion, reflecting an annual growth rate of about 13%.

If this pace continues, Hogan estimates that the global store of value market will grow to nearly $121 trillion within 10 years.

In this scenario, Bitcoin would only need to capture about 17% of the market to reach the $1 million mark.

While that would represent a significant gain from its current stake, Hogan said institutional acceptance and wider investment allocations could make the change acceptable.

“A few years ago, there were no US bitcoin ETFs and few institutional owners,” Hogan wrote, adding that bitcoin exchange-traded funds are the fastest growing in history.

“…Bitcoin is owned by everyone from the Harvard endowment to Abu Dhabi’s sovereign wealth fund, and Bitcoin’s long-term volatility has fallen to the point that most professional investors consider a 5% allocation,” he said.

Adding: “There are still miles to go, but with these reserves, capturing a sixth of the value sales market in 10 years doesn’t seem too much.”

Recent exchange traded fund (ETF) data suggests that investor demand may be shifting towards Bitcoin.

Over the past 30 days, net inflows into US-listed Bitcoin ETFs have turned positive, reversing the heavy outflows seen early last year.

BlackRock’s iShares Bitcoin Trust (IBIT) led the rebound, attracting about $185.8 million in the latest round.

Meanwhile, gold-backed ETFs are starting to see a pullback after a long period of strong demand.

The SPDR Gold Shares (GLD), the largest U.S. gold ETF, recently recorded its biggest one-day outflow in more than two years, according to market commentary from Kobe Steel.

Hogan’s prediction comes amid a new wave of bullish predictions by crypto analysts.

Pseudonymous analyst Plan B said bitcoin could average around $500,000 during the current 2024-2028 market cycle under its stock-to-flow model, which is what bitcoin is worth based on its programmed decline.

The model implies an average price close to $500,000 for the cycle, suggesting that Bitcoin may reach between $250,000 and $1 million if historical patterns repeat.

Not all market watchers are rushing to buy bitcoin at current levels.

In a recent interview, Maelstrom Fund Chief Investment Officer Arthur Hess said he wouldn’t buy Bitcoin today — even if he only had $1 to invest — arguing that the next big rally would likely require a new wave of global liquidity.

Hayes said he was waiting for a clear signal that central banks, particularly the US Federal Reserve, were returning to monetary tightening.

For now, he said his portfolio is positioned defensively, evenly split between cash and gold.

“When central banks start printing money again, that’s when I buy bitcoin,” he said.

At the same time, Hayes warned that several macroeconomic risks could weigh on markets in the near term, including geopolitical tensions and potential economic disruptions associated with rapid advances in AI.

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