Bitcoin is top of mind for governments, companies, and investors.
With a hard cap of 21 million units, Bitcoin's scarcity is its most compelling feature.
Since it possesses superior qualities compared to gold, Bitcoin could be worth more than the precious metal.
Financial markets are always evolving. This is never more apparent than when you consider the advent of the cryptocurrency industry, a new asset class that has attracted lots of investor attention. Huge returns have been made, especially with the top digital asset, Bitcoin (CRYPTO: BTC).
In the last decade, Bitcoin's price has increased by a remarkable 50,080% (as of Sept. 12). If you've been watching this dominant cryptocurrency's ascent from the sidelines, there's no reason to be discouraged that you missed the boat. Meaningful upside remains over the long term.
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I predict that Bitcoin's price will hit $1 million in 10 years.
Image source: Getty Images.
In a span of nearly 17 years, Bitcoin went from being a funny internet money to a legitimate asset that has strategic implications for governments and financial institutions. This is exemplified by its huge market cap, which currently sits at $2.3 trillion.
The U.S. is embracing it. President Donald Trump helped set up a Strategic Bitcoin Reserve, with the goal of making this country a leader in crypto. Wall Street is getting involved, to seek profits and give customers what they want. Large asset managers offer spot Bitcoin exchange-traded funds (ETFs) nowadays. Since the Securities and Exchange Commission approved these in January 2024, they have seen unprecedented capital inflows.
Corporations are getting involved, too. For instance, MicroStrategy, now doing business as Strategy, completely upended its business model in 2020, transforming into a Bitcoin holding company. Its shares are up 2,280% just in the past five years, a pleasant surprise for what was just a struggling software enterprise.
The U.S. has $37 trillion in federal debt, a figure that has ballooned since the 2008 financial crisis and after the COVID-19 pandemic lockdowns, due to all the stimulus pumped into the economy. This has resulted in an expanding monetary base as well. This is not just happening in the U.S. In the past 15 years, the M2 money supply of the four largest economies (U.S., the European Union, Japan, and China) has expanded by 149%.
So, on one side, there is a constantly growing amount of fiat currencies circulating in our economy. And on the other side, there is a limited amount of Bitcoin that has a hard cap of 21 million units. In a vacuum, an ever-increasing supply of government-issued money chasing a scarce asset in Bitcoin should undoubtedly cause the latter's price to skyrocket. And this is precisely what has occurred in the past.
Of course, there are a lot of other factors involved. Those who control capital must actually want to own Bitcoin. This is where education comes into the picture. As people start to learn more about Bitcoin's special properties, most notably its scarcity, while also understanding that the U.S. and other countries are on unsustainable financial paths, they'll want to allocate their savings toward something that has been proven to increase purchasing power over time.
When dealing with actual businesses that generate revenue and cash flows, investors can utilize traditional valuation methodologies to estimate what they're worth. Bitcoin is different. However, investors can look at gold as a comparison, as both are neutral and global assets with scarcity.
The market value of all the gold in the world is $24.7 trillion. In my view, Bitcoin can reach, and perhaps even eclipse, this huge figure by 2035. This means its price, which is currently $115,000, could easily rise tenfold in a decade to get to well over $1 million per unit.
Bitcoin is superior to the precious metal in many areas, as the digital asset is scarcer and more portable, divisible, transactable, and verifiable. Gold's only advantage is that it has a much longer history as a popular store of value. But in a digital world, Bitcoin's time has come.
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Neil Patel has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bitcoin. The Motley Fool has a disclosure policy.