Is it Possible for Bitcoin's Market Value to Soar to $10 Trillion within a Decade?
Cryptocurrency (BTC dropping by 0.33%) is currently shining bright, and there's a valid reason behind it. The digital currency has surge by an astounding 85% in the past 3 months (as of Dec. 11), and this year, it's skyrocketed an unbelievable 140%.
This remarkable climb is just another chapter in Bitcoin's impressive journey. It's mind-blowing to think that this digital asset, which was just an idea 16 years ago, is now worth more than $1.9 trillion today.
However, Bitcoin's supporters are hoping for more good news. Can the digital currency's market cap soar up to $10 trillion by the end of 2034?
Climbing to $10 trillion
If Bitcoin manages to join the 14-figure club, it will surpass many established enterprises. As of now, the most valuable company globally is Apple. This tech giant boasts a market cap of $3.7 trillion. Following closely behind is the AI infrastructure powerhouse Nvidia, worth $3.4 trillion.
For Bitcoin to reach $10 trillion in a decade, its market cap would need to increase at a compound annual rate of 17.9%. In the past five years, the cryptocurrency has seen its price rise by an average of 69.5% annually. So, there's plenty of room for further upward momentum as we look ahead.
Keep your expectations in check
A decade or so ago, Bitcoin was just a fascinating project for computer science enthusiasts. No one could have predicted that the asset would expand into a thriving financial ecosystem, with recognition and support from Wall Street and Washington insiders.
However, with its growing legitimacy, Bitcoin is now maturing as a financial asset. This means that the historical incredible returns are likely to diminish as the asset attracts more global wealth, leading to decreased volatility and reduced uncertainty.
Scarcity is crucial
The unique feature of Bitcoin is its limited supply. There will only ever be 21 million units in circulation, enforced by the halving schedule. Every 4 years, the rewards for miners who process transactions and secure the network get cut in half.
This means that Bitcoin's inflation rate is known in advance, making it an attractive investment for those looking for a fixed supply. Many believe that Bitcoin can serve as a digital equivalent of gold, providing a secure place to store and even grow their purchasing power.
As a decentralized digital protocol with no CEO or employees, Bitcoin is unlike a traditional company that sells products and services. Therefore, it's difficult to perform a valuation using a discounted cash-flow model or comparing various earnings multiples.
When contemplating Bitcoin's ultimate potential, consider the possibility that it might one day reach a market cap of $18 trillion – the value of all the gold ever mined. This suggests a potential ninefold increase in value. As a decentralized digital asset with a fixed supply, Bitcoin is likely to continue attracting global wealth as a store of value.
Under this perspective, it's entirely feasible and within reason to expect Bitcoin's market cap to increase roughly fivefold, or a compound annual rate of 17.9%, over the next 10 years to reach $10 trillion. By the end of 2034, the digital currency might even have even more potential for growth beyond that point.
In the pursuit of reaching a market cap of $10 trillion, Bitcoin needs to maintain a compound annual growth rate of 17.9%, significantly higher than its past five-year average of 69.5%. If successful, Bitcoin would surpass tech giants like Apple with a market cap of $3.7 trillion.
Given Bitcoin's limited supply and potential as a digital equivalent of gold, there's speculation about its market cap reaching $18 trillion, which is the value of all the gold ever mined. This would represent a ninefold increase, indicating that Bitcoin may continue to attract global wealth as a store of value beyond $10 trillion.
