1. Looking Beyond Digital Gold: Bitcoin’s Potential
Often perceived solely as digital gold, Bitcoin was initially proposed by the pseudonymous Satoshi Nakamoto in the form of a peer-to-peer electronic cash system. However, in its Big Ideas 2023 report, Ark Invest identifies eight potential uses for Bitcoin that, when combined with future growth projections, could result in a remarkable valuation. Cathie Wood of Ark Invest believes that Bitcoin could potentially reach a value of $1.48 million per token by 2030 in the most optimistic scenario.
2. Bitcoin as an Institutional Asset Class
When constructing investment portfolios, equities and fixed income assets (stocks and bonds) are typically the go-to choices. However, Wall Street influencers now recognize Bitcoin as an emerging alternative asset class alongside real estate, commodities, and private equity. Given its distinctive risk-reward profile, institutional investors find Bitcoin increasingly attractive and may allocate 1% to 2.5% of their portfolios to this crypto. Ark Invest, for example, uses 1% in its base-case scenario and 2.5% in its bull-case scenario to determine optimal portfolio blends. With these investors managing trillions of dollars, even a 1% allocation could result in billions of dollars flowing into Bitcoin. Spot Bitcoin exchange-traded funds (ETFs) that track Bitcoin performance will likely be the preferred investment vehicle for institutional investors, potentially injecting a substantial amount of capital into Bitcoin and driving up its price over time.
3. Bitcoin’s Long-Term Stability and Scarcity
In the S&P 500, only a limited number of companies have sustained existence for a century or more. Similarly, Bitcoin’s rate of new token creation is meticulously controlled through a computer algorithm, reducing the pace by half every four years in a process known as halving. With 19.5 million bitcoins currently in circulation and a maximum lifetime supply of 21 million bitcoins, it can be projected that there will be approximately 30 more halving cycles. By around the year 2140, the last bitcoin will be mined. This perceived long-term stability contributes to Bitcoin’s appeal among crypto investors.
While there are indeed 40,500 Bitcoin millionaires, it’s important to note that there are also one million crypto wallets worldwide holding at least one whole Bitcoin. Based on these figures, the chances of achieving millionaire status (even with a $43,000 investment in one whole Bitcoin today) are estimated to be less than 5%.
When it comes to the crypto that holds potential for millionaire-making, Bitcoin takes the lead.