Bitwise: Bitcoin requires just 17% of global 'store of value' market for $1M price target
According to Bitwise's Matt Hougan, Bitcoin can achieve a price of one million dollars per coin over the coming decade without needing to capture half of gold's total market capitalization.
According to Matt Hougan, chief investment officer at Bitwise, Bitcoin only requires approximately one-sixth of the worldwide "store of value" market—which is presently led by gold—to achieve a valuation of $1 million per coin.
Writing in a blog post published on Tuesday, Hougan explained that many analysts reject this ambitious Bitcoin price prediction because they believe it would necessitate Bitcoin capturing 50% of the present market capitalization of gold.
Yet Hougan contends that the "mistake" being made by most analysts involves overlooking both gold's expansion and the overall growth trajectory of the "store of value" marketplace.
The market capitalization of gold has experienced approximately 13% growth on an annual basis since 2004, expanding from $2.5 trillion to roughly $38 trillion, fueled by "rising concerns about government debt, geopolitical uncertainty, easy monetary policy, and other factors."
If this growth rate continues, the global 'store of value' market will be [around] $121 trillion in 10 years. At that level, Bitcoin only needs to take 17% of the market to be worth $1 million a coin.
Among the potential drivers, Hougan pointed to the expansion of institutional investment vehicles, including exchange-traded funds, sovereign wealth funds, and growing portfolio allocations.
"There are still miles to go, but with these undercurrents, capturing one-sixth of the store-of-value market in 10 years doesn't seem extreme," he said, adding:
As I see it, the base case — that the store-of-value market will continue to grow as it has, and Bitcoin will continue to gain market share as it has — leads you to much, much higher prices than we have today.
Bitcoin and gold divergence deepens
The million-dollar Bitcoin (BTC) forecast from Hougan relies on the cryptocurrency continuing its convergence trajectory with gold; nevertheless, recent months have demonstrated that Bitcoin has not been tracking gold's price movements closely.
Gold reached an unprecedented high of $5,327 per ounce during late January, and currently sits merely 2.2% below that record, while Bitcoin is presently changing hands down 44% from its October high point.
In early March, billionaire investor Ray Dalio issued a warning against viewing Bitcoin as a dependable long-term store-of-value and safe-haven asset, asserting that gold represented a superior choice.
His argument centered on the fact that central banks are not purchasing BTC, and he characterized its behavior as more closely resembling a tech stock.
On March 6, Greg Cipolaro, global head of research at NYDIG, stated that it seems Bitcoin is "not currently being priced as a macro hedge, a sovereign risk hedge, or a real-rate or inflation trade."
That dynamic helps explain the ongoing frustration around Bitcoin's failure to 'act like gold' despite the digital gold label.
