A bitcoin price of $1 million? It sounds like an impossible dream at first. However, if we look at current figures and developments, extensive colonization of the moon does not seem unrealistic.
What would have to happen for the price of Bitcoin to break the $1 million mark? There is no doubt that a large amount of capital would have to flow into the market. But not as much as one or the other might think at first.
The thing about market capitalization
The calculation seems simple at first. 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 billion. With the current market capitalization of nearly US$760 billion, we are still US$18.2 trillion short. Where are they supposed to come from?
The answer is: we don’t need that much. After all, market cap says little about how much money is actually in Bitcoin. Simply multiply the current bitcoin rate by the number of coins in circulation. And the current price just shows at what price people are currently buying and selling Bitcoin.
Also: It is estimated that 4 million BTC have disappeared in the land of lost keys and will probably never be traded again. Therefore, Bitcoin is a very scarce commodity that will become increasingly scarce as demand increases. So much 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 several catalysts that, together, could lead us to our goal.
Jikh lists the international remittance market as the first catalyst. In principle, this is the number 1 use case for cryptocurrencies: 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 were to claim around 50 percent of the international remittance market, it would inject $300 billion into the ecosystem. The price of Bitcoin would thus increase by 14,000 US dollars.
Catalyst 2 is the currencies of emerging markets, that is, the money and money equivalents of emerging countries. These include the Chinese yuan, the Russian ruble, the Brazilian real, and the Indian rupee. This is where BTC can act as a store of value. As recently as February, Goldman Sachs announced that it believes Bitcoin is likely to play an increasingly important role as a reserve currency in the future.
If BTC manages to claim 10 percent of the market here, it would inject $2.8 trillion into the market. For the course of Bitcoin, that would mean a plus of US$133,000 per coin. Jikh describes this as a conservative estimate: the top 4 emerging market currencies would be excluded from this calculation.
Catalyst 3 for the Bitcoin price of $1 million is the Economic Settlement Network, the international payment network. The background: When banks send money, they usually have a currency that they «are» in, for example, the US dollar.
If the cryptocurrency manages to claim 25 percent of this market, another $3.8 trillion would go into the digital pot of gold. According to Jikh’s calculations, that would be an additional $181,000 per BTC.