The chief investment officer of Bitwise Asset Management says Bitcoin could reach $1 million under what he describes as “reasonably conservative assumptions.”
In a new memo titled “How Bitcoin Gets to $1 Million”, Matt Hougan argues that many analysts underestimate Bitcoin’s long-term potential because they treat the global store-of-value market as static.
Hougan says he evaluates Bitcoin as a digital store-of-value asset competing primarily with gold.
Using that framework, estimating Bitcoin’s potential price involves calculating the size of the store-of-value market, estimating Bitcoin’s share, and dividing that value by Bitcoin’s fixed supply of 21 million coins.
Currently, the store-of-value market totals just under $38 trillion, according to Hougan, including roughly $36 trillion in gold and about $1.4 trillion in Bitcoin. That places Bitcoin’s share of the market at slightly below 4%.
At that size, Bitcoin would need to capture more than half of the market to reach $1 million per coin – a scenario Hougan says appears unrealistic if the market itself does not expand.
However, he argues the key factor many investors overlook is that the store-of-value market has historically grown significantly.
When the first US gold ETF launched in 2004, the gold market was worth about $2.5 trillion. Today, it has grown to nearly $40 trillion.
If that growth trend continues, Hougan estimates the global store-of-value market could reach about $121 trillion within the next decade. In that scenario, Bitcoin would only need to capture around 17% of the market to reach $1 million per coin.
Hougan acknowledges risks remain, including the possibility that the store-of-value market grows more slowly or that Bitcoin fails to gain significant share. But he argues the opposite outcome is also possible.
“As I see it,” Hougan says, “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.”
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