Why Bitcoin price will not reach $1 million? This is not a very complicated question but a lot of people still hope that BTC will be worth that much quite soon. In this short video I summarized the reasons it will be quite complicated for BTC to be worth that much. Please, do not assume that I hate Bitcoin or anything like that. I simply want to put my 2 rubles into discussion.
Here it is. I made this graph to show you the importance of capitalization. Why is it important? Higher the price of a given asset, higher the capitalization. And it is extremely hard to grow from $100bln to $16 trillion without strong fundamentals or mass adoption. On this graph, I showed how big capitalization of Bitcoin should be to reach certain price targets. I gave examples of $10 000 for 1 BTC, $50 000, $150 000, and $1 000 000. Also, to make this presentation more interesting I decided to add a comparison. I know that we shouldn’t compare stocks or gross domestic products of countries to cryptocurrencies, but I still did it simply to give you some perspective on how huge market cap of Bitcoin can be if it reaches certain price targets.
$5 751 is our current situation as of 29th of October 2017. As you know, there are 16mln bitcoins in circulation and this number is going to grow to 21mln at some point. By multiplying current number of BTCs in circulation by current price, we get $95bln of Bitcoin market cap. This number is close to the valuation of one of the biggest investment banks in the world, Goldman Sachs, $93bln.
$10 000 is going to be the price of Bitcoin if its capitalization almost doubles in size to $166bln. This market cap is comparable to current IBM valuation, $143bln.
$50 000 is the future price of one Bitcoin if its market capitalization grows to the size of Apple company. The market cap will be $832bln and the current Apple market cap is $842bln.
$150 000 for 1 BTC is going to take place when Bitcoin market cap will be 26 times bigger than its current valuation. By then, it will reach $2.5 trillion and will be comparable to GDP of France.
Finally, when 1 Bitcoin will be worth $1 000 000, it will have valuation which is over 173 times bigger than current BTC market cap. It will be over $16 trillion. You can compare it to the whole money supply of US or GDP of European Union.
On this slide. I would like to show you my 4 reasons on why Bitcoin will not be worth as much as $1 million. Again, I do think that Bitcoin will be worth a lot, I simply do not expect that 1 BTC could reach $1 million in near 10-15 years. Of course, if no hyperinflation of USD happens =).
I. Whole Eurozone/USA must use Bitcoin as a currency for it to reach $1mln. Bitcoin is a currency and should be valued as such. Even though, I expect Bitcoin to absorb value of other assets. How probable is it that Bitcoin will be used by such a huge amount of people? Time will show
II. Remember that Bitcoin is not the only option. There is going to be fierce competition for the 1 place. Why can’t ether become the currency all the people around the world will use? Ethereum is already used much intensively than Bitcoin, you simply have to take a look at the number of daily transactions of each blockchain. To be honest, I think that Ethereum has more chances at becoming such a highly valued asset.
III. Governments will not give up monetary policy that easy. Monetary policy is an important part of government control of our lives, there is going to be a long-lasting struggle before lawmakers give up and allow cryptocurrency to take its deserved place in our economies.
IV. Finally, technical limitations of Bitcoin will obstruct the BTC mass adoption. Forks, transaction speed, miners, governance problems…