Raoul Pal, the CEO and founder at Real Vision, believes the price of Bitcoin (BTC) can reach $476,000 in the long-term. Pal is not alone in this belief as hedge fund managers like Morgan Creek Digital’s Mark Yusko have also made similar predictions in the past.
Currently, the price of Bitcoin hovers at around $9,700 and high-profile investors like Max Keiser and Mark Yusko believe Bitcoin can rise to $500,000 in the long-term under two simple scenarios. One requires Bitcoin to overtake the gold market and the other stipulates that Bitcoin operates in a strong ecosystem.
If it becomes an ecosystem, and we believe it will be and it will take the whole ecosystem with it as well, then yes, I think a $10 trillion number is easily achievable within that process.
According to data from CoinMarketCap, Bitcoin’s current market cap is $177 billion. The figure is reached by multiplying the circulating supply of 18,377,331 BTC to the market price.
The total market capitalization of gold is estimated to be $8 trillion, meaning Bitcoin’s market capitalization is merely 2.2% of gold. This shows that Bitcoin is still in an early phase of growth.
Bitcoin versus traditional assets. Source: howmuch.net
Why will Bitcoin compete against gold?
A growing number of investors, institutions, and hedge fund managers are actively exploring alternatives to traditional assets to store wealth and the U.S. Federal Reserve’s aggressive fiscal policy continues to raise concerns about the future performance of the U.S. stock market.
Investors fear that over the long run the Fed’s current policy of printing record high amounts of cash will lead to the devaluation of the U.S. dollar.
As an example, earlier this week Paul Tudor Jones, one of the top hedge fund managers in the U.S. with a net worth of over $4 billion, said that he is investing at least 1% of his portfolio in Bitcoin as a hedge against inflation.
Veteran investors like Peter Schiff frequently argue that gold is one of the best hedges against market volatility and while this is true, there are limitations such as fungibility and the ease of transporting the asset.
By nature, Bitcoin is a blockchain network that is run by node operators, miners, and developers. Every transaction that is settled on the network is like a piece of data that is confirmed and verified by miners.
As such, it is transparent, fast, and easy to send transactions on the Bitcoin network to transfer value, whereas with gold, its physical attributes restrict transportability.
Industry executives issue moonshot Bitcoin price estimates
In a recently published essay, Xapo CEO Wences Casares advised that medium to large-size portfolios should have at least some exposure to Bitcoin.
In the long-term Casares said that the price of Bitcoin could reach a million dollars if more than 3 billion people start to use BTC.
My preferred way of guessing how the price of Bitcoin may evolve is much more prosaic. I have noticed over time that the price of Bitcoin fluctuates around ~ $7,000 x how many people own bitcoins. So if that constant maintains and if 3 billion people ever own Bitcoin it would be worth ~ $21 trillion (~ $7,000 x 3 billion) or $1 million per Bitcoin.
The predictions between $500,000 to $1 million consider a future wherein Bitcoin is widely acknowledged as a leading store of value alongside gold, and billions of people use it on a regular basis to transfer value.