Bitcoin vs $1 Trillion Market Cap

If Bitcoin reached a total market cap of $1 Trillion, a single coin would be worth $60,113! (Based on todays supply of 16.6 million coins). But how likely is this to happen? Today we do some very rough calculations in an attempt to establish if the golden 1 Trillion cap is achievable or just a dream.

We’ll start with AON Canada who published a report in 2016 of the total Global Invested Capital Market. Their report indicated that this figure is $155 Trillion, a figure which includes everything from equities to bonds, real estate, commodities, bank loans and more! Now i’m not deep enough in the financial world to evaluate if this figure is accurate or exactly what it does and doesn’t represent, but I think it is an interesting insight into how big the investment market is. Do note however that this figure does not include company stocks.

Most ‘normal’ people don’t tend to invest more than 15% of their annual income, with a large proportion of people not wanted to invest in anything outside of a super safe ISA. This is based on my own personal experiences within the middle class of the United Kingdom. ‘Investing’ in general is seen as a very risky proposition which many either don’t understand or lack the ambition to learn. I say this to alleviate the argument posed by a lot of crypto-junkies who say things like

When Bitcoin reaches mass adoption the price will hit the moon!!

Their assumption is that ‘mass adoption’ means a significant percentage of the population. For comparison Bankrate carried out a survey on the American population (albeit with a tiny survey pool of just 1000 people) which resulted in a figure of 43% of the American population who invest in stocks.

It seems concrete data is hard to find and I can only assume that a large portion of the population do invest in the markets but through a work place pension scheme and so when asked, wouldn’t say they ‘invest’ in the stock market. This leads to two factors when it comes to investment funds flowing into Bitcoin. 1) That institutional money becomes more prevalent, and 2) Out of the 43% that do invest, they start to see Bitcoin as a better alternative to more traditional options.

I see both these scenarios playing out over the next 5 years, but this doesn’t factor in the role Altcoins will play, and subsequently how much of Bitcoin’s market cap they will start to steal away. But this post is specifically about Bitcoin, so we’ll leave the Altcoin discussion for another day.

Let’s get to some figures

Average income in the United States is $81,400, If we divide the total US population by 50% giving us a rough estimate of citizens who would likely invest in Crypto, and then take a very conservative estimate that those people invest 1% of their annual income into crypto, the US at a relatively high saturation rate could be responsible for $122 Billion of Bitcoin’s market cap.

Figures are hard to pin down but based on exchange volume the US is second only to Japan with 29% and 53% of volume respectively, followed by Europe and South Korea. These 4 regions are responsible for 96% of Bitcoin’s exchange volume alone. For reference (very rough) average annual salary figures for the remaining 3 regions are as follows:

• Japan: ~$39,000 (Population: 127 Million)
• Europe: ~$45,000 (Population: 743 Million)
• South Korea: ~$45,000 (Population: 51 Million)

If we use the same 50% of the population investing 1% of their annual income into Bitcoin the total market cap (including the US) would be: $387.2 Billion. At todays coin supple of just over 16.6 million coins in circulation, that would result in an individual Bitcoin price in the region of $23,275.

This obviously falls short of the $1 Trillion market cap and an individual coin price of $60,113 ($47,619 if we factor in BTC’s max supply of 21 Millions coins). But the question was can/will BTC reach a trillion dollar market cap? Theoretically it can, based on the AON figures, but will it? That’s going to require a greater proliferation of crypto knowledge throughout the world, not to mention increasing confidence that Bitcoin or any other cryptocurrency isn’t going to go to zero.

Ultimately my feeling is that whether it’s $23k or $60k a coin, we need patience. Over time we’ve seen a steady rise in the permeation of crypto to a wider subset of the worlds population. Every day that Bitcoin still hasn’t dropped to zero, is another step towards greater adoption. And the more adoption we see, the more Bitcoin will become a valid asset class for which individuals and institutions will look towards.

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