Despite the fact that Bitcoin (BTC) is trading around 40% below its all-time high and trying to maintain stability above $70,000, the long-term bullish view of its value remains intact, especially according to Matt Hougan, Chief Investment Officer at Bitwise Asset Management.
Recently report titled “How Bitcoin Will Reach $1 Million,” Hougan argues that Bitcoin will become an emerging store of value asset, performing a similar function to gold.
Road to $1 million
Hougan offers a simple method to estimate the potential value of BTC. This process involves determining the size of the store of value market, determining Bitcoin’s share of that market, and then dividing its limited supply of 21 million coins.
At the moment, general stock market of value is just under $38 trillion, consisting of about $36 trillion in gold and about $1.4 trillion in Bitcoin. As a result, Bitcoin now accounts for just under 4% of this market.
According to Hougan, this number may lead many to believe that the price of $1 million for Bitcoin is unrealistic, especially since to reach this value, Bitcoin would have to occupy more than 50% of the market of the store of value.
However, management points out an important aspect that is often overlooked: the stock market is not static. It has seen significant growth over the past two decades and concerns have faded depreciation of fiat currencythis trend remains.
The potential growth of Bitcoin
A key point in Hougan’s analysis is that the value storage market is expected to expand significantly. He predicts that within ten years this global market could reach about 121 trillion dollars.
Under this scenario, Bitcoin only needs to gain about 17% of the market to reach its price. 1 million dollars per coin. While achieving this level of growth – from around 4% to 17% – would require significant progress, given Bitcoin’s recent developments, it is becoming increasingly possible, he said.
While Hougan acknowledges the optimism surrounding this prediction, he also highlights potential risks. If the global stock market does not grow as it has in the last two decades, the price of gold may fall. Furthermore, Bitcoin may struggle to gain additional market share.
On the contrary, Hougan cautions that these projections may be too conservative. As concerns about going up public debt reaching a critical level, the growth of the store of value market could accelerate, resulting in BTC gaining a larger than expected 17% share.
He points out that the prevailing outlook, in which both the store of value market continues to expand and BTC continues to increase its share, could see prices significantly higher than they are today.
According to CoinGecko, at the time of writing, BTC is trading around $70,130 and has registered an 8% gain over the past two weeks. information.
Featured image from OpenArt, chart from TradingView.com
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