I might be wrong about the 94 cents. Please look at the research below and draw your own conclusions.

This research examines four aspects. Firstly, what percentage of the world's adult population own any bitcoin.

Secondly, how much is that holding of bitcoin worth compared to the investor's wealth band. In order to make the numbers meaningful, I broke them down by wealth band. In other words, a millionaire who chooses to invest in bitcoin is likely to own more bitcoin than somebody with a net wealth of $10'000.

Thirdly I look at the supply and demand equation based on new mining (supply around 600'000 coins), sellers of existing coins - I calculate sellers could be divesting a maximum of 1.4 million coins at existing prices.

I also calculate the likely demand for coins from new first-time investors. At present prices the demand would be for 6.6 million coins.

Fourth: I work out some possible price scenarios which would bring the supply and demand back into balance.

Now if you can't be bothered to follow the logic, assumptions and methodology described below, you can skip to the bottom to see the conclusions.

Net-wealth bands in USD

The table takes into account the net wealth of every adult on the planet. The number of adults in each wealth band has been extracted from the Credit Suisse Global Wealth Report 2016. The net wealth bands are $100 to $10'000, $10'000 to $100'000, and so on. You can see from the table below that there are only 2026 adults with a net wealth in excess of $1 billion, but there are over 3.5 million adults with a net wealth below $10'000. There are nearly 29 million adults who have a net worth of between $1 million and $5 million. The Credit Suisse study shows plenty of adults with zero or negative net-worth. For the sake of the mathematics, I put a minimum net wealth of $100. My Excel spreadsheet doesn't like it when I tried to divide by zero.

Bitcoin wealth bands

We can know with certainty how many bitcoin wallets exist. At the time extracted the data a week ago, there were 19.8 million bitcoin addresses with a balance of more than zero. Of these 13 million held less than $10 worth of bitcoin, with an average balance of $1.37 in bitcoin. I describe the small balances as "dust" and do not attribute them to any particular group of adults. It depends where you put the cut-off point for "dust", but if you put it at $10 and below, then there only around 6 million active wallets. That's approximately 1 wallet per 800 adults.

Number of adults who hold any bitcoin.

It's difficult to know for sure how many people own some bitcoin. Some will own multiple wallets, whilst others will own all their bitcoin through an omnibus account like an exchange or an ETF/ETN. For the purposes of this exercise, I think it is a good estimate to say one cancels out the other. Therefore I make the assumption that 1 bitcoin wallet = 1 adult. I think it is a reasonable assumption. Ignoring the "dust", (i.e. the insignificant balances), there are between 6 and 10 million owners of bitcoin.

What percentage of each investor's wealth is in bitcoin?

The reason I pose this question is because it affects the number of wallets attributable to a particular net-wealth band. We can know for sure the value of bitcoin in each and every wallet. However, we can not know for sure which group of people (as defined by their net-wealth band) would own that wallet. For example, if a wallet contains 1.5 bitcoins, worth $4000 each, the value of that wallet is $6'000. If we were to say that a typical bitcoin investor would choose to put 10% of his net worth into bitcoin then we can infer that the owner of that wallet has net worth of $60'000. That investor would belong in the wealth-band of $10'000 to $100'000. On the other hand if we were to say that a typical bitcoin investor would only put 1% of his net worth into bitcoin, then we would have to assume that the investor has a net worth of $600'000, and belongs in a different wealth bracket. i.e. he is in the wealth bracket of $100k to $1 million.

To deal with the above uncertainty I have crunched the numbers below making different assumptions as to how much net worth gets invested in bitcoin. I made assumptions of 1%, 2% 4% and 10%. The four tables are below, starting with 1% and moving up to 10% of net wealth in bitcoin.

Table 1 (assumes a typical bitcoin investor would choose to put 1% of his wealth into bitcoin)

Comment

The first table seems very distorted. It would imply 20% of the super-high-net-worth individuals (above $500 million), have already invested in bitcoin. In reality, this is very unlikely to be the case. Many of the 1'177 large wallets allocated to this wealth band, are likely to be omnibus accounts owned by exchanges, ETFs/ETNs, hedge funds and so on. However the results for the lower wealth bands, below $5 million seem plausible. This shows that less than 1% of the world's adults own any bitcoin.

In this table, I am dis-regarding any bitcoin balance worth less than $1. Nine million wallets are thus treated as "dust".

Table 2 (assumes a typical bitcoin investor would choose to put 2% of his wealth into bitcoin)

Comment

Here the number of bitcoin owners in every wealth band, except the $5m to $10m band, drops. This seems to make more sense that the table before. Probably the super-high-net-worth haven't been exposed much, whilst those in the $5m to $10m bracket are likely to be company owners, and captains of industry. They will be facing bitcoin questions from the customers, and will be likely to have a strong interest in diversifying surplus wealth. This $5m to $10m wealth bracket sees the number of bitcoin investors rise from 37'062 adults to 56'266 adults or 2.26% of the 2.5 million people in that wealth band.

Also another factor to note is that all bitcoin balances below $2 are now treated as "dust", reducing the total population of bitcoin owners by 1.8 million compared to the $1 cut-off point. This brings the number of bitcoin owners to around 9.4 million, or 2% of the world's population. In the next table, I raise the cut-off point for "dust" to $4.

Table 3 (assumes a typical bitcoin investor would choose to put 4% of his wealth into bitcoin)

Comment

Now we see a much smoother distribution of bitcoin adoption. There are slightly more wealthy bitcoin investors in percentage terms than the poor, but the difference is not as big as before. 0.38% of those with $1m to $5m have invested in bitcoin compared to slightly below half that percentage for those worth less than $1 million.

By raising the bar for "dust" to $4, it reduces the total number of bitcoin owners to around 8 million adults, or just below 2% of the global adult population.

Table 4 (assumes a typical bitcoin investor would choose to put 10% of his wealth into bitcoin)

Comment

This table looks the most plausible of them all, since the distribution of bitcoin investors is much flatter. The percentage of investors in bitcoins is similar irrespective of net-worth. For most wealth bands, up to $50 million the number of people exposed to bitcoin is less than 0.5%, or less than 1 in 200 individuals. In the bands below $1 million, which represent most of the world's adult population, it's about 1 person in 735 who has exposure to bitcoin.

In this table, I have raised the bar for "dust" to $10. That reduces the number of active wallets to 6.6 million or 0.15% of the adult population, or around 1 in each 666 adults.

Table 5 (assumes a typical bitcoin investor would choose to put 20% of his wealth into bitcoin)

Comment

This time, I have to exclude all wallets which hold less than $20 as "dust"

I don't think 20% exposure to bitcoin is rational behaviour for a sophisticated and knowledgeable investor. However I must accept that this is close to the reality for three reasons.

Firstly, many of the people whom I have met and who are already bitcoin investors, tell me that they are putting everything they can spare into bitcoin. They are absolutely passionate about it, to the point of excluding all other investments. In other words they won't own stocks, bonds, gold, or cash in the bank. They may own their home, with a mortgage, but everything else goes into bitcoin.

As an example, I met the Chief Investment Officer of a major bank at a wedding last Saturday. He told me that in his "private" opinion, the perfect strategy is 80% stocks and 20% bitcoin. Of course he can't tell this to his clients. Bitcoin is so volatile that he could be made into a fool the next day. So he has to preach conventional theory to his clients of cash, bonds, shares, gold, property funds, alternatives, but NO bitcoin.

Second reason: Look at the chart above. The distribution of bitcoin wallets by wealth band is the smoothest of them all. It implies that irrespective of wealth, roughly the same percentage of people are currently bitcoin owners. This would be the most logical and rational assumption. (Once again we must ignore the super-wealthy band where the numbers are small and the percentages are likely to be distorted. It would be practically impossible for a billionaire to put 20% of his wealth into bitcoin, because his money would already be invested in other things, and his banker/wealth manager certainly isn't going to recommend it.

There is a third reason to think that 20% is possible. According to my research there has not been much movement in the bitcoin wallet balances over the last 12 months. (see below). One year ago the price was around $600. At that time those investors would have only had 3% of their net wealth in bitcoin. That 3% has climbed to 20% due to the rise in price. For the most part, they did not sell, (see evidence below).

Did investors sell the 6.66X rise in price over the last year?

The rise in price has not generated that much in the way of selling. The number of wallets with a certain balance has not declined, except for the very largest balances over 1000 bitcoins, worth upwards of $4 million. If people had been net sellers, the number of small bitcoin wallets would have increased at the expense of middle sized wallets. That didn't happen. For example wallets with between 1 and 2 bitcoins rose from 134'000 to 190'000 in one year implying a 41% increase. This percentage increase was fairly typical for wallets worth from $80 to $50'000.

Only wallets with more than 1000 bitcoins, (worth $4 million+) saw falls. The trickle-down seems to be evenly spread among all middle wallet sizes, (0.02 btc to 12.5 btc) implying that the typical investors were holding on, rather than becoming net sellers. In the 0.001 btc to 0.02 btc range ($4 to $80 range) there was closer to 110% increase in the number of wallets, but in value terms the amount was not significant enough to change my view that sellers were few.

What we see from Table 5 above is that there are about 5.6 million active wallets representing 5.6 million investors or around one in 800 adults have chosen to invest in bitcoin so far. There's a long way to go.

Conclusions

If you didn't study the above, here are the shortened conclusions:

1. Depending on the assumptions we make, we can conclude that between one adult in 400 and one adult in 800 is investing in bitcoin. The evidence above strongly points to the one in 800 number. There is a long way to go before bitcoin gets adopted by the masses. It's well under 1% no matter what wealth band you are in.

2. It seems plausible that a man-in-the-street bitcoin "fanatic" now owns 20% of his net wealth in bitcoin. That would have been just 3% a year ago. The increase coming from the rise in price from $600 to $4000 over the last year.

3. The evidence is that there was very little selling by those who currently hold between $80 and $50'000 worth of bitcoin. Otherwise the number of smaller wallets would have increased at the expense of the number of larger wallets. That didn't happen. All wallets in that range increased in number by roughly the same percentage of around 40%.

4. 40% is a good guess at the number of new bitcoin users over the last year, even if the total number of bitcoin wallets with more than $1 increased by 60%. By excluding small balances between $1 and $80 - where the increase was around 110% in number of wallets - the increase in number of wallets with a meaningful balance was around 40%.

How much can the price go up next year?

Let's make two assumptions based on the maths above:

Firstly that the 40% new users of the last year won't be sellers despite a price rise.

Secondly that there will be another 40% new users in the next 12 months.

That means that the number of users will have doubled from last year to next year. Half of those users won't be inclined to sell at all. They would let their investment rise 6 fold from 3% of wealth to 20% without selling - as happened to the long-term users of last year.

As for the other half, who already hold 20% of their wealth in bitcoin - mainly due to the 6.66 fold rise in price, many will see the lure of a Lambo, and become net sellers. We can infer how much they would sell from the higher wealth band's behaviour last year. Statistics show that in the $400k to $1 million wallet range the number of wallets increased by only 6%. Compare this to the norm for the bulk of the population of a 40% increase, we can conclude that around 25% of users sold some part of their investment, dropping to a lower number of bitcoins despite net new investors coming into the band to increase the number of investors in the band by 6%.

I will therefore conclude that over the next 12 months, some 25% of the old, (holders of more than 1 year), bitcoin holders will sell part of their holding - reducing the number of bitcoins they hold. They will be met by 40% new users trying to acquire 6.6 million new coins. Newly mined supply will meet 600'000 of that need, leaving existing holders to sell 6 million coins. If only 25% of all existing holders are net sellers, as I imply by my maths, that would mean they would have to sell 145% of their coins - i.e. a physical impossibility.

Therefore we can conclude that at today's price of $4000, demand for bitcoin over the next 12 months is going to massively outstrip supply from mining and sellers. The only rational conclusion is that the price has to move significantly higher to entice sellers to sell more. If 25% of holders were to sell 33% of their holding, that would still only produce 1.4 million coins out of the missing 6 million. Don't forget, my 25% seller estimate was based on the selling over the last year when the price went up 6.666 times. But let us assume that the average seller doesn't want to repeat that trick. All he wants to do is keep the value of his investment constant. At what price the number of bitcoin sold go up, or at what price will the demand for new bitcoin drop to the available supply of 1.4 million coins. The answer to the second part of question is easy. The price would have to be 4000 X 6'000'000 / 1'400'000 = $17'142 by this time next year. That's 4.3X today's price.

However, the flaw in the calculation is the assumption that 1.4 million coins would be available at this price, (plus the 600'000 newly mined bitcoin). As we saw last year, it took a 6.66 fold increase to produce the 25% of sellers that I calculated.

There's a lot more complex mathematics which could go into the calculations and there are a range of assumptions that could be different.

Having tried most of the possible scenarios and assumptions, I can reach the conclusion that the price of bitcoin one year from now will most likely be in the range $7'030 to $98'630. It's a very wide range, I know. Let me just explain how I got to the $98'630 possible target. I calculated that by looking at the changes in wallet sizes in the second half of last year and comparing it with the changes between January and May this year - just before the big spike in price from $2'330 to $4'000, inferring the net new demand, (increasing gradually), and the impact it is having on the price. I then flatlined the growth - i.e assumed growth in new investors goes constant, instead of accelerating. From assumptions that investor behaviour will be predictable - the higher the price goes, the more who will sell, and then looking at the new buyers buying less coins as the price rises, I could come with a future price projection. Here it is:

Warnings:

Warning: The assumptions made could change dramatically. The price may not turn out as expected. It may fall to nothing.
Warning: Bad news, such as exchange closures, defaults, government intervention, outlawing bitcoin etc will dramtically decrease demand causing very severe price drops, and potentially making it worthless.
Warning: Geo political events such a war, nuclear war, cyber-crime, internet shut-downs, solar flares, terrorism and so on could destroy the value of bitcoin.
Warning: some countries may make buying, selling and owning bitcoin illegal. Then how will you sell it? You will have a big problem what to do.
Warning Don't invest in bitcoin unless you are prepared to lose all of your money, your spouse, your family, your friends your job, your business and your credibility.
Warning: If you lose money, your spouse will divorce you, your children won't get educated, your enemies will laugh at you and your friends will say "I told you so". You will look like a fool. Would you put so much money on a horse?
Warning, the price of bitcoin can drop 50% in a day. You could be a fool tomorrow.

This is not investment advice. It's pure guesswork based on some highly variable assumptions. It's like betting on a horse. She might fall at the first hurdle.

I put days of work into this research. I really hope some of you find it interesting and useful.