Bitcoin Is Headed to $500,000. This Wall Street Analyst Explains Why.

It's been a rough year for Bitcoin (CRYPTO: BTC) and cryptocurrencies in general. Still the largest crypto asset globally, Bitcoin's price has fallen to just $65,000 in recent weeks. Its total market cap is down to around $1.3 trillion.

Another price surge, however, could be just around the corner, according to one Wall Street analyst. You'll want to listen to why he believes Bitcoin holders shouldn't give up just yet.

Expect more pain over the short term

Geoff Kendrick, the head of digital asset research at Standard Chartered, a British bank with nearly $1 trillion in assets, recently warned investors that the recent cryptocurrency correction may not be completely behind us.

"Near-term, we see potential for further price downside in the coming months," he wrote in a note to investors. Why? Because investors still seem to be withdrawing assets from crypto-based ETFs. "Holdings of digital asset ETFs have fallen (albeit in an orderly manner), and the average Bitcoin ETF holding is now down around 25%."

Still, Kendrick views the recent volatility as nothing other than a speed bump along the way to his long-term price prediction. This year, he still believes Bitcoin will regain the $100,000 mark as the emerging asset class continues to mature and become more resilient.

Looking beyond to 2030, Kendrick remains confident in his $500,000 price target. "We think that the involvement of institutional investors and ETFs will cushion the downside this time, leading to less extreme total declines," he observes, adding that "Our constructive long-term view remains intact."

It's not hard to find other price predictions that agree with Kendrick's $500,000 target. The latest estimates from Ark Invest, led by iconic fund manager Cathie Wood, call for a $710,000 Bitcoin price target by 2030. At minimum, the firm anticipates a $300,000-per-Bitcoin price, with a $1.5 million-per-Bitcoin price target if conditions allow. Ark's No. 1 value driver: institutional investment, primarily through spot ETFs.

In short, both Kendrick and Wood believe institutional involvement will drive Bitcoin's long-term value while mitigating its downside potential. But there's one other value driver investors should monitor closely.

Image source: Getty Images.

Will Bitcoin really reach $500,000?

What could possibly warrant a $500,000 Bitcoin price target? A simple comparison to gold provides the easiest answer.

It's not too often that a "store of value" asset comes along. These are assets that investors buy as they retain value simply by being themselves. Real estate is a solid example. So is art or collectibles.

But gold is the long-term king. Valued for thousands of years, society simply agrees that gold -- despite its limited industrial use -- is valuable simply because we all agree that it has value.

In many ways, Bitcoin is digital gold. Its supply cannot be controlled by outside forces, and in the long term, no more Bitcoins will be mined.

In this way, it's a scarce asset with strong social value. Right now, gold's total market cap is roughly $36 trillion. After the recent correction, Bitcoin's market cap is down to just $1.3 trillion. If Bitcoin were to reach value parity with gold, a single Bitcoin would be worth approximately $1.7 million.

Experts like Cathie Wood are also on board with this valuation approach. Her firm, Ark Invest, recently called Bitcoin "a nimbler, more transparent store of value relative to gold." Bitcoin's potential to take market share from gold is a big factor behind their price prediction. "In our view, Bitcoin as digital gold is an appealing narrative and will drive penetration," a report from Ark Invest concludes.

Of course, this value parity is far from guaranteed. And it may take decades to achieve. But a simple comparison to gold, which attributes zero value to Bitcoin apart from its store of value potential, demonstrates how reasonable a $500,000 long-term price target is.

Ryan Vanzo has positions in Bitcoin. The Motley Fool has positions in and recommends Bitcoin. The Motley Fool recommends Standard Chartered Plc. The Motley Fool has a disclosure policy.