$1M Bitcoin ‘Sounds Crazy,’ But Bitwise CIO Says Statistics Are High

Matt Hougan believes that Bitcoin only needs 17% of the market cap of $121 billion to reach $1 million.

Bitcoin could reach $1 million if it captures about 17% of the $121 billion market, according to Matt Hougan, chief investment officer at Bitwise Asset Management.

In a recent memo, he explained that long-term market expansion could support very high prices for digital assets.

The Statistics Behind the Target

Hougan said that this idea at first seems impossible because the valuation of 1 million will require Bitcoin to rise about 14 times from its current price, a target that he himself spent in 2018, when BTC is trading close to $ 4,000.

However, after studying the role of assets in the financial markets, he said that a common mistake in assessing the power of Bitcoin in the long term is to manage the store-of-value in the market as fixed rather than increasing. Hougan described Bitcoin as a growing digital store-of-value asset that competes with gold by allowing investors to hold wealth outside of traditional fiat currencies and banking systems, although he acknowledged that cryptocurrency remains more volatile and less available than metal.

According to the Bitwise exec, estimating the potential value of BTC involves calculating the total size of the global store of value, estimating the portion that Bitcoin can take, and dividing that amount by the maximum supply of the asset of 21 million units. Based on current figures, Hougan said the stock market is worth less than $38 trillion, including about $36 billion in gold and an estimated $1.4 trillion in Bitcoin. This means that BTC currently represents a little less than 4% of that market.

Under those circumstances, he said a BTC price of $1 million would seem unreasonable because the cryptocurrency would need to capture more than half of the existing market for the store of value. He described the situation as “a high bar.” However, the CIO noted that the market itself has grown significantly over time and could continue to grow. He pointed to the growth of capital in the metal market over the past two decades, and added that when the first US gold exchange-traded fund was launched in 2004, the global market was worth about 2.5 billion dollars.

Since then, the value of gold has increased to nearly $40 billion, representing a compound annual growth rate of approximately 13%, driven by concerns about government debt levels, global uncertainty, loose monetary policy, and other macroeconomic factors. Hougan said if the broader retail market continues to grow at the same pace, it could reach about $121 trillion over the next decade.

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Under that scenario, Bitcoin would only need to capture about 17% of the market to reach a value of $1 million per BTC. Hougan admitted that this would still represent significant growth, as BTC’s current share hovers around 4%, but he said that recent developments suggest that increasing adoption could make such a change possible.

Main Risks

Despite the optimistic outlook, Hougan said there are risks that could prevent this situation from happening. He noted that the retail price market may not continue to grow at the same pace seen over the past two decades, including events such as the global financial crisis, the widespread adoption of quantitative easing, and a prolonged period of low interest rates.

A decline in those trends could also lead to a decline in gold prices. Another possibility is that Bitcoin fails to capture more market share.

At the same time, Hougan said it’s also possible that current speculation undermines the asset’s strength if concerns about rising government debt intensify and investors increasingly turn to other stores of value. Under his baseline scenario, he said the store-of-value market will continue to grow while Bitcoin gradually increases its share. He added that such a combination would lead to higher prices than current levels.