Reaching $1 million per Bitcoin sounds far-fetched to many investors, but Bitwise Asset Management CIO Matt Hougan says the skepticism is rooted in flawed analysis.
Hougan argues that most analysts rely on what he calls “static math” when projecting Bitcoin’s long-term price potential, ignoring how markets actually evolve.
The standard valuation approach estimates the size of the global store-of-value market, assigns Bitcoin a share of it, and divides by the maximum supply of 21 million coins.
Today, the global store-of-value market sits just under $38 trillion, with gold accounting for roughly $36 trillion and Bitcoin contributing approximately $1.4 trillion.
Under that framework, Bitcoin currently holds just under 4% of the total store-of-value market, which is why a $1 million price target sounds unreasonable to many observers.
At current market size, Bitcoin would need to capture more than 50% of the global store-of-value market to justify a $1 million valuation, which is an extraordinarily high threshold.
However, Hougan’s central argument is that the store-of-value market itself is not fixed and has expanded dramatically over the past two decades.
Gold’s market value stood at roughly $2.5 trillion in 2004 when the first U.S. gold exchange-traded fund launched, rising to nearly $40 trillion since then.
“If this growth rate continues, the global ‘store of value’ market will be ~$121 trillion in 10 years,” Hougan wrote, adding that “Bitcoin only needs to take 17% of the market to be worth $1 million a coin.”
Institutional adoption of Bitcoin has accelerated sharply, with Bitcoin ETFs proving to be the fastest-growing ETFs of all time since their launch, attracting major institutional capital.
Holders now range from the Harvard endowment to the Abu Dhabi sovereign wealth fund, representing a dramatic shift from just a few years ago when Bitcoin was capped at a 1% portfolio allocation.
Hougan acknowledged meaningful risks to the scenario, noting the store-of-value market’s past growth was shaped by exceptional events including the global financial crisis and prolonged quantitative easing programs.
A slowdown in those macroeconomic trends, or a reversal in loose monetary conditions, could dampen gold prices and limit expansion of the broader store-of-value market.
He also flagged the possibility that Bitcoin simply fails to capture additional market share, which would undercut the entire thesis regardless of how large the broader market grows.
Despite those risks, Hougan expressed equal concern that current projections are too conservative, suggesting the base case still leads to “much, much higher prices than we have today.”
