Bitcoin at a million dollars? The incredible projection that could come true
But what is the limit of bitcoin? Could it be worth a million dollars or more? Some experts believe so, and that it is only a matter of time.
The potential of bitcoin as a store of value
One way to estimate the maximum price of bitcoin is to compare it with the money that exists in the world. According to the International Monetary Fund, the global money supply (M2) was about $95 trillion at the end of 2021. This includes cash, checking accounts, demand deposits, and time deposits.
If bitcoin became the world's main store of value, replacing gold, the dollar and other currencies, it could take up a large part of that money supply. Assuming that the maximum number of bitcoins that can exist is 21 million, which is expected to occur in the year 2140, the price of each bitcoin would be about $4.5 million.
However, this figure does not take into account the fact that many bitcoins have been lost or inaccessible, reducing the true supply of the cryptocurrency. According to a study by Chainalysis, a blockchain analysis company, it is estimated that between 2.8 and 3.8 million bitcoins are out of circulation, representing between 14% and 18% of the total.
Taking this factor into account, the maximum price of bitcoin could be even higher, exceeding $5 million per unit.
The exponential growth of bitcoin in the market
Another way to project the price of bitcoin is to analyze its historical behavior in the market. Bitcoin is characterized by four-year cycles, marked by halvings of the reward for mining new bitcoins. Each time this occurs, the supply of new bitcoins is cut in half, creating more scarcity and upward pressure on the price.
In the past, bitcoin halvings have triggered periods of strong growth, followed by corrections and consolidations. For example, after the first halving in 2012, bitcoin went from around $10 to over $1,000 in 2013, an increase of 10,000%. After the second halving in 2016, bitcoin rose from around $600 to almost $20,000 in 2017, an increase of 3,300%. After the third halving in 2020, bitcoin rose from around $9,000 to over $69,000 in 2021, an increase of 766%.
If this trend continues, bitcoin could continue to grow exponentially in the coming years, especially given the growing adoption, innovation, and favorable regulation in the cryptocurrency sector. Some analysts have applied the stock-to-flow model, which measures the relationship between the existing supply and the annual production of a resource, to predict the price of bitcoin. This model suggests that bitcoin could reach $100,000 by the end of 2021, and $288,000 by the end of 2024.
However, bitcoin also faces several challenges and risks, such as competition from other cryptocurrencies, market volatility, cyberattacks, government bans, and environmental issues. Therefore, there is no guarantee that bitcoin will reach these price levels, nor that it will maintain them in the long term.
Bitcoin, a unique opportunity for investors
Bitcoin is one of the most revolutionary innovations in history, offering a decentralized, transparent and secure alternative to the traditional financial system. Its potential as a store of value, medium of exchange and investment asset is enormous, and could transform the global economy.
However, bitcoin is also a highly speculative asset, requiring high risk tolerance, a long-term vision and adequate diversification. Investors who want to take advantage of the bitcoin opportunity must be prepared to face market fluctuations, regulatory uncertainties and possible adverse scenarios.
Bitcoin could be worth a million dollars or more, but it could also fall to zero. No one knows for sure, and only time will tell.
