Ever since I started investing in Bitcoin, people have been dreaming about a “million-dollar Bitcoin”. In this article, I’ll take this question seriously and figure out how, why, when, and if Bitcoin can reach one million dollars.
Yes, Bitcoin can reach $1,000,000 if institutional adoption accelerates and a regulatory framework is put in place. It will have a fully diluted market capitalization of $21 Trillion, and it is predicted by the Stock to Flow Model and The Fair Value S2F Model to happen within this decade.
Bitcoin at a million bucks seems kind of abstract…
Let’s compare its market cap to some other things you’re familiar with:
As you can see, if Bitcoin reaches one million dollars, its market cap will exceed the M2 Money supply, which basically represents the market cap of the U.S. Dollar.
“That sounds insane. Bitcoin worth more than the U.S. Dollar…?”
I know how it sounds if you’re not a “Bitcoiner” yet.
But hear me out!
If you read through this article with an open mind, I think you’ll understand why Bitcoin can reach one million dollars this decade.
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When Will Bitcoin Reach One Million Dollar?
To answer this question, we must use data science and models. Specifically, I’ll look at what three different models say about it:
- The Stock to Flow Model
- The Fair Value S2F Model
- The LogFit Model
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The Stock To Flow Model: (creds to Plan B)
Plan B did an amazing job modeling the price of Bitcoin as a function of the stock to flow.
Stock to flow tells you how long it will take to double the supply of something.
If the stock to flow of Bitcoin is 50, it means that it takes 50 years to double the supply of Bitcoin at the current inflation rate.
Gold has a really high Stock to Flow, which is the main reason behind its historical strength as a store of value.
Generally speaking, high stock to flow = high value.
At the time of writing, Bitcoin has a stock to flow of 54, while Gold has a stock to flow of roughly 75.
However, Bitcoins stock to flow doubles every four years – leading to exponential price explosions!
This metric, the stock to flow, is what Plan B used when making his famous model.
Let’s take a look at it and figure out when it predicts that Bitcoin will reach $1 Million:
The chart above shows that the Stock to Flow model predicts Bitcoin to reach one million USD in 2025.
We tend to lag a little bit behind the predictions from this model. As of late, a “lengthening cycles” theory has been popular, stating that the cycles of the crypto market are becoming longer and longer. This means:
Even though the S2F model predicts 2025, we should probably read that as 2025-2028, or something like that.
The Fair Value S2F Model:
This is a model I made myself. It shows the fair value of Bitcoin at any given time. It is based on several fundamental factors like the stock to flow, days until next halving, future stock to flow, etc.
The green dashed line represents the fair value of Bitcoin. That’s what Bitcoin should be priced in a rational market:
As seen above, the Fair value S2F model tells us that a million-dollar Bitcoin is fair in 2025.
Now, just because a $1 million price is fair in 2025 doesn’t mean it will materialize. Therefore, we should think 2025 +/- a few years, depending on other factors…
The red line on the model above is the “over-bought” line. You want to sell your Bitcoin above this line.
The white line is the “over-sold” line. Below this line is where you want to accumulate Bitcoin.
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The LogFit Model:
This model is purely technical, which means that it doesn’t care about the fundamentals at all. It exclusively looks at historical price data, nothing else.
This model shows the logarithmic trendlines that make up the channel that bitcoin has been kept within for the past decade:
This model tells us that Bitcoin can’t reach one million dollars before 2031 and that we might have to wait until 2037 for Bitcoin to hit seven figures.
This model sticks out from the other two. Both others predict it to happen somewhere around 2025, while this model predicts 2031 – 2037.
Suggested reading: Realistic Bitcoin Price Prediction 2021/2022
Another Reason Bitcoin Might Reach $1 Million In 2025:
Before every Bullrun, Bitcoin goes through a halving. If you’re unfamiliar with this event, you’ve got some reading to do, my friend!
The halving is one of the most important aspects behind Bitcoin’s value!
I will stay away from the technical stuff; you can read my detailed article about how the halving affects the Bitcoin price here if you want.
Nevertheless, you need to know this:
Every four years, the amount of BTC that Bitcoin miners receive is cut in half. Consequently, the amount of BTC sold by miners is cut in half. This creates a massive shift in the supply/demand of bitcoin, leading to an exponential price increase.
The next halving happens in 2024, setting 2025/2026 up as the year for Bitcoin to reach $1,000,000.
Once again, we’ve seen a tendency for cycles to lengthen. This argument assumes a four-year cycle, which might turn out to be false in terms of predicting the time of a market peak. The argument that the halving causes parabolic price action still stands.
How Bitcoin Can Reach One Million USD:
For Bitcoin to reach one million dollars, two things must happen:
- More Adoption
- Clear Regulation
Without these two, we’ll probably never see the seven-figure prices that we’re all dreaming about.
Let’s break it down:
Bitcoin Needs Adoption To Reach $1,000,000:
Adoption, in this case, means “more people holding it”. It’s that easy – the adoption of Bitcoin is the same as buying (and holding) Bitcoin!
Think about it: What’s Bitcoins function? What does Bitcoin do?
Bitcoin is (1) A store of value (2) A means of exchange.
To adopt Bitcoin is to either use it as payment in transactions or buy a lot of it and hold it for the long term (storing wealth).
Most people agree that before the lightning network is rolled out completely, Bitcoin doesn’t do very well as a means of exchange.
Bitcoin is relatively slow, expensive, and cumbersome to use at the moment. Other alternatives, like Solana, is more suitable for this use case.
Did you know that Solana has 60 000 times lower fees than Ethereum? That’s just one of the things making Solana a good investment.
However, as a store of value, Bitcoin is unparalleled.
According to Morgan Stanely, we’re at a critical threshold where crypto might become “accepted” as an investment class, not just as a “gambling vehicle” for retail investors. (source)
If companies like Apple and Amazon start buying Bitcoin and storing it in their reserves, we see one million dollars in no time.
Also, if more countries follow El Salvador in making Bitcoin legal tender, things will start happening fast!
Remember, Bitcoin is a network:
If more people join, everyone in the network gains value from it. The more people that join the network and adopt Bitcoin, the more attractive it is for outsiders to join as well!
This network effect leads to exponential growth and is an unstoppable force when it gets going.
Bitcoin Needs Clear Regulation:
This is important because institutions and businesses are held back by this. Many companies would probably love to buy Bitcoin, but they don’t know how to maneuver the legal and regulatory landscape because it’s unclear what the rules are.
Until we get clear regulation, which would be a good thing (as long as it’s fair), we will not see one million dollars per BTC. We need the regulation to get more institutional adoption.
Why Bitcoin Will Reach $1 Million USD
For crypto enthusiasts, the “million-dollar question” is not a “how” question, but a “when” question.
If you haven’t done your homework and spent 20-100 hours learning about how Bitcoin works, how central bank monetary policy works, and how the USD fails as a store of value, you’re probably not convinced yet.
Let’s go through why Bitcoin will reach $1,000,000 in the future and how the USD fails as a store of value.
Please keep in mind; I’m not a financial advisor. I will present a simplified version of the real world to you meant to give you an idea of what’s going on.
The U.S. Dollar is Failing – Bitcoin is the Solution:
Look, I not saying we’re going to stop using the U.S. Dollar…
I’m saying that the U.S. Dollar is not going to remain the fundament of our financial system forever.
Today, the U.S. Dollar is what every other currency is “backed” in. It’s what gives the other currencies value.
Another way to think about it is that “everything is valued in USD”
“Okey… but what makes the U.S. Dollar valuable?”
However, back in the day, the U.S. Dollar was backed in Gold, and Gold is actually worth something (more on that later).
But, in the 1970′ Nickson dropped “the gold standard”, making the U.S. Dollar the fundamental layer of value.
The good thing about the gold standard was that it limited how much new money we could make:
Back then, you could not create more value in currency than you had value in gold, basically.
Today, The U.S. Dollar is backed by nothing. Therefore the central bank of The United States can do whatever it wants to the supply of USD.
They can create as much USD as they please.
Back in the day, they needed to hold large gold reserves and make sure that they had enough gold to back all the USD floating around in the country.
Now, they just hit some buttons on a computer, and all of a sudden, a few trillion Benjamins come into existence.
This is a huge problem, as it makes The U.S. Dollar a terrible store of value.
For something to be a good store of value, it MUST be hard to make more of it in a short amount of time. If not, it is sensitive to manipulation and easy to inflate/devalue.
Bitcoin Fixes This Problem:
It is impossible to mess with the supply of Bitcoin. It is hard-coded into the program how much new BTC should be released over time. The inflation rate is precisely predictable and unchangeable.
Also, Bitcoin is reaching “absolute scarcity”, meaning that there’s a hard-cap on its supply, at 21 million BTC.
These, among other strengths like being decentralized and practically un-hackable, make Bitcoin the ultimate store of value.
“Yeah Sure, But Why Do We Need A Store Of Value?”
We need a place to store our value because the thing we get paid with loses value over time. If you have no decent way of storing value, you’ll have to work until the day you die.
If you keep the money you earn from your job in FIAT (USD, EURO etc.), you’re losing value faster than you think.
You’ve heard about inflation, I’m sure. And you’ve probably heard that it’s about 2-3% per year. Well, it’s much higher than that.
This is the last 20 years as reported by the U.S. BUREAU OF LABOR STATISTICS:
However, it’s much higher than that.
They keep changing the way they measure inflation to keep the numbers low.
This is not a tin-foil hat conspiracy thing. They are transparent in the ways they measure it.
If we look at the way they measured it in the and 90′ this is what today’s numbers would be like:
The blue line is the inflation measured as they did in the 90′. It’s consistently and significantly higher than the current way to measure it.
This is what it looks like if we use the 80′ way of measuring:
We see several years with inflation above 10%. This means that your hard-earned money and everything you own loses 10% of their value (unless it goes up in price) every ear, decreasing exponentially.
You Need Something That Outpaces Inflation – Bitcoin
This is probably only getting worse over time. Inflation is growing like crazy after the COVID response of printing trillions upon trillions of dollars.
As investors, we need to ask ourselves:
“What investments can I make that will outrun inflation?”
After all, if your returns are 7%, but the inflation is 10%, you’re actually losing 3%…
You need to find something that can make a consistent 10-20% per year for many years.
Nothing does this, except two things: Technology stocks and Bitcoin.
Bitcoin has produced an annualized 200% return every year for a decade now.
Returns like that beat everything else by far. Nothing even comes close to that.
For example, The S&P 500 has a good year when it goes up 10%.
10% is just another Tuesday for Bitcoin…
In Other Words:
Bitcoin is the best store of value in times of high inflation. It will protect investors from the 10-15 percent inflation rate that we’re seeing, even though the “official” inflation rate is closer to 5%. The ever-increasing demand for a store of value will push the Bitcoin price higher, making it reach one million dollars.
Put simply; Bitcoin is a life-raft with limited space next to a sinking ship. When the ship starts taking in water, people will pay top dollar for a ticket onboard Bitcoin.
Be smart – buy Bitcoin BEFORE the other passengers realize that the ship is sinking. You’ll save a lot of money 😉
Conclusion: Yes Bitcoin Can Reach One Million Dollars
Bitcoin can reach $1,000,000 due to the increasing inflation and need for a solid store of value. It is predicted by the Stock to Flow Model and The Fair Value S2F Model to happen in 2025, while The LogFit Model predicts sometime between 2031 -2037.
I hope you liked this post. Feel free to share it – it helps me out a lot!
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