Bitwise’s Hougan makes the case for bitcoin to hit $1 million in 10 years
To reach a seven-figure price, bitcoin would need to capture more than 50% of the store-of-value market, “a very high bar” that “sounds unreasonable to many,” Hougan wrote, but noted there’s a point most people miss.
Bitcoin remains steady on Wednesday morning, sticking around the $70,000 level as uncertainty over oil prices and inflation, coupled with geopolitical tensions, drives investors to exercise caution.
Despite the current backdrop, some experts remain extremely bullish about bitcoin’s trajectory in the longer term. Bitwise CIO Matt Hougan wrote a blog post about his prediction for bitcoin to reach $1 million in 10 years, acknowledging that “$1 million sounds crazy. It implies bitcoin will rise 14x from today’s price.”
Hougan’s argument is that bitcoin is “an emerging store-of-value asset,” akin to gold, and while it’s more volatile, “it is increasingly competing for the same market.”
“With that framing in mind, the basic math for estimating its value is straightforward: Estimate the size of the store-of-value market, estimate bitcoin’s share of that market, and divide by 21 million (the maximum total supply of bitcoin). That gives you an implied price,” Hougan wrote.
Hougan added that the store-of-value market is currently worth $38 trillion, with the bulk of it ($36 trillion) in gold and $1.4 trillion in bitcoin, around 4% of the market.
To reach $1 million, bitcoin would need to capture more than 50% of the store-of-value market, “a very high bar” that “sounds unreasonable to many.”
“But here’s the point most people miss: The store-of-value market is not static. In fact, it has expanded dramatically over the past two decades. And as concerns about fiat currency debasement spread, I suspect that will continue,” he wrote.
When asked what he means by the store-of-value market not being static, Hougan told Sherwood News that it means the size of that market is growing over time.
“So, when you project bitcoin’s opportunity, you have to take into account that the size of the market it’s targeting will likely be bigger in 10 years than it is today,” he said.
Hougan told Sherwood that bitcoin could reach $1 million in even fewer than 10 years, depending on how quickly adoption accelerates and how much people rotate away from fiat currencies, among other factors.
“The goal of the piece was to show that you can get to $1 million, which sounds pretty wild at first glance, with pretty conservative assumptions,” he said.
As for where bitcoin currently stands, Hougan told Sherwood it looks like it’s forming a bottom.
“We’ve been in a classic crypto winter, and we’re in the earliest days of a classic crypto spring. That doesn’t mean we’ll go straight up from here; in fact, I (like many) think there’s a reasonable chance we’ll head back into the 60s at some point. But it does mean to me that I think today’s prices will look cheap in one or two years’ time,” he said.
In the short term, despite the overall caution and bitcoin’s fairly stagnant movement, some experts see signs of hope.
Nic Puckrin, cofounder of Coin Bureau, said the encouraging signs include ETF flows staying positive since the war in Iran began and the fact that net taker volume, as measured by the 30-day moving average, has also remained positive, suggesting that buyers are in control.
“In the short term, we would need to see BTC stay above $68,700 today for the bullish signal to be confirmed. Overall, it has been printing higher lows, which is typically a good sign,” Puckrin said.
