What would have to happen for Bitcoin price to cross the million dollar mark? There is no doubt that capital should flow into the market. But not as much as one or the other might think at first glance.
Market capitalization
The calculation seems simple at first sight. With a bitcoin price of $1 million and a circulation volume of just under 19 million bitcoins, we would arrive at a market capitalization of $19 trillion. With the current market cap of nearly US$760 billion, we are still short of US$18.2 trillion. Where are they supposed to come from?
The answer is: we don’t need that much. After all, market capitalization says little about how much money is actually in Bitcoin. It simply multiplies the current bitcoin price by the number of coins in circulation. And the current price only shows at what price people are currently buying and selling Bitcoin.
Additionally: An estimated 4 million BTC have disappeared in the Land of Lost Keys and will likely never be traded again. Bitcoin is therefore a very rare commodity that will become increasingly rare as demand increases. That’s it for the basics.
$1 Million Bitcoin Price: That’s What We’re Missing
As financial youtuber Andrei Jikh explains in a recent video, there are different catalysts that together could lead us to our goal.
Jikh cites the international remittance market as the primary catalyst. In principle, this is the number 1 use case for cryptocurrency: sending money. This system is currently characterized by long waiting times, limited opening hours on weekends and high fees. Bitcoin is much more efficient there. According to Jikh’s analysis, if the cryptocurrency claimed around 50% of the international remittance market, it would inject $300 billion into the ecosystem. The price of Bitcoin would thus be increased by 14,000 US dollars.
Catalyst 2 are emerging market currencies, ie the currency and monetary equivalents of emerging countries. These include the Chinese Renminbi, Russian Ruble, Brazilian Real and Indian Rupee. This is where BTC can act as a store of value. Only stays in February Goldman Sachs state that they believe it is likely that Bitcoin will play an increasingly important role as a reserve currency in the future. If BTC manages to claim 10% of the market here, it would inject $2.8 trillion into the market. For the Bitcoin course, that would mean a plus of US$133,000 per coin. Jikh describes this as a conservative estimate: the 4 major emerging market currencies would be excluded from this calculation.
Catalyst 3 for the $1 million Bitcoin price is the Economic Settlement Network, the International Payments Network. The background: When banks send money, they usually have a currency they “meet” in, such as the US dollar. If the cryptocurrency manages to claim 25% of this market for itself, an additional US$3.8 trillion would enter the pot of digital gold. According to Jikh’s calculations, this would represent an additional $181,000 per BTC.
Treasuries, High Net Worth Individuals and Institutional Investors
Catalyst 4 are the state coffers. If bitcoin managed to grab 1% of the reserves here, we could add another $3.8 trillion to our hopium-rich digital treasury. An additional US$181,000 would then be added to the Bitcoin price. In any case, the fact that El Salvador will not remain alone for long with its acceptance of Bitcoin plays in favor of this argument.
Catalyst 5 for a Bitcoin price of 1 million US dollars are high net worth individuals, that is, wealthy people. If these people converted 5% of their assets into BTC, we would still have $4 trillion in the pot. For the Bitcoin price, that would be $190,000 more.
As a sixth catalyst, Jikh cites institutional investors like Blackrock, whose CEO recently spoke positively about digital currencies. If they held 2.5% of their assets in digital gold, that would add another $4.1 trillion to the market capitalization. Or: an additional $196,000 for the Bitcoin course.
The seventh catalyst for the bullish moon are corporate Treasuries. 5% of this wealth would represent $4.2 million in additional BTC market capitalization. Or: One more than 200,000 US dollars for Bitcoin price.
The eighth and final catalyst in Jikh’s lists is gold. If Bitcoin secures its place in the sun and takes half the market capitalization of gold, another $5.5 trillion would pour into wallets around the world. That would be $260,000 more for the Bitcoin course. You can read here why it’s not so unlikely.
$1 Million Bitcoin Price: Does It All Read Coffee Leaves?
If all of these factors came true, Bitcoin would hit $1.36 million. But is it realistic?
BTC is said to have a market capitalization of $28.5 trillion. However, that would represent just under a third of the global stock market, which currently has an estimated market capitalization of $106 million. This prediction is by no means entirely unfounded.
Buy bitcoins now?
So should you buy BTC now? It should be clear: the statements made are all in the realm of probability, no one can claim the magic crystal ball for themselves and cannot predict the future. All information is in this sense without guarantee. Nevertheless: Growing institutional interest, growing acceptance of bitcoin, which is met with an ever-diminishing supply, can be seen as positive signs.
In terms of charts, Bitcoin price doesn’t look bad either. Here Jikh suggests Mayer’s multiple indicator from technical chart analysis. This compares the current price of Bitcoin to the moving average of the last 200 days (200 SMA). This creates a quotient which, based on historical data, gives an assessment of the possibility of a good entry point. In the past, when it was below 2.4, this has proven to be a good entry point in hindsight.
Mayer’s multiple indicator is currently at 0.9.
The historical average for the price of bitcoin is 1.4 – so if you take the Mayer multiple as a base, this is currently an optimal opportunity to buy bitcoin. You can do this with eToro, for example.
You can see the full video in English here.
Disclaimer: This article reflects the opinion of the author only and does not constitute investment advice, a recommendation to buy or sell.
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