Industry News Set of Circumstances needed to See Bitcoin Price reach into Millions of USD

Set of Circumstances needed to See Bitcoin Price reach into Millions of USD

August 3, 2021

Making predictions about the long-term price trajectory of bitcoin is one of those cherished traditions in the fresh space of cryptocurrency-oriented media. Over the years, there has been an endless stream of predictions when it comes to what price a BTC token will have in a year, two, or five. The late John McAfee was famous for the same outlandish forecasts, which were often seen as ludicrous and completely unfounded. While most of his takes did not materialize in those time frames – or at all, when it comes to 80,000 USD for a bitcoin token – the tradition continues to grow and persist. There is a simple psychological element behind it. A person making some claim for the future high point of the bitcoin price will likely get some crypto media attention.

That is a clear and immediate benefit. If their predictions turn out to be wrong in a year or two, few if any will go back to the same statement and showcase it as an example of the predictor not knowing enough (or anything) about cryptocurrencies. Yet, if they are somehow right and time proves them correct, they can take the same fact and use it further for their own advantages, not just in the crypto niche, but in the wider media space. Recently, another set of distant price values of bitcoin came about and it foresees a potential future when a single BTC token is worth up to 4 million USD. The sum is beyond incredible, but this prediction at least comes with a set of necessities for the same thing to actually take place in the real world. Most of these are nearly impossible in the coming months, but they also showcase an interesting landscape of underpinning factors that prop up the bitcoin price potential.

Big Names, Big Predictions

Tim Draper is a famous venture capitalist. He has been a part of the very vocal and very bullish crowd who believes that the previous record value of the BTC token is only the beginning. In the past several years, Draper said time and time again that the bitcoin price will hit 250,000 USD before the end of 2023. That is more than a substantial sum of money and something that not many believe to be possible not just in 2023, but possibly in this decade.

However, Global Equities Research’s Trip Chowdhry is not one of them. He sees BTC hitting a somewhat bigger sum of 4 million USD, making his estimate precisely 16 times that of Draper’s. But, the prediction is not just some random number that analysts cooked up. He believes that there is a roadmap that would lead to the point where a person or a company would need to present several million USD to buy just one BTC token.

Embedded Scarcity

A huge part of the appeal of the bitcoin network is the fact that it comes with a level of embedded scarcity that is a crucial part of the wider blockchain system. It is configured in a way that there can ever be only a total of 21 million bitcoin tokens. For regular economy and fiat currencies, this form of hard cap is likely senseless, but for digital ventures, like esports, for example, that form of self-defined restrictions makes perfect sense. Presently, there are around 18.8 million tokens that have been mined by digital currency mining pools. The price of those individual tokens is presently mowing in the upper 30,000 USD range. Because of that, the present market cap is set at below one trillion USD.

When that is put in perspective, the financial potential is clear, even with the present relative slowdown in the market movement, at least in comparison to the record results a few months ago. In comparison to big global companies, bitcoin still holds its own. Apple has a total capitalization set at 2.4 trillion USD. Microsoft, another huge global business, has around 2.1 billion USD. Alphabet, which is the company that stands for Google, has a market cap of 1.8 billion USD. The value of bitcoin because of this is very high, but for it to reach a value of a token of 4 million USD, its market cap would skyrocket beyond anything the financial community saw so far. More precisely, in that case, it would come with a market cap of 84 trillion USD.

Factors to Prop Up 4 Million USD Price Tag

Like it was already stated, Chowdhry set up a list of potential developments that would be needed for the price of BTC to reach this insane level. First is the need for bitcoin to increase its mining system and the overall potential to mine more tokens. That would in turn ask for more energy, which would have to come from renewable sources. Otherwise, the risk of the energy-wasting narrative would remain too strong to allow the price to catapult itself so far beyond the present best result. Without that ability to run on renewable energy sources, bitcoin would remain a dirty tech for too many individuals and companies who would be ready to use it. Besides the energy, the bitcoin network would need some serious support from both the US institutions of IRS and the SEC.

The IRS would still need to allow crypto transactions and investments to go without any taxes, as long as they are under 10,000 USD. That would cover individual activity. The SEC would need to placate the companies and institutions by supporting the process of adding bitcoin holdings to their balance sheets. This is even more important than the cryptocurrency retail potential for ordinary citizens because it would usher in a gradual outpour of investment from big companies. While names like Microstrategy are already there, the ranks of HODL institutions would swell if they knew that the SEC is fine with that alternative. In this ecosystem, bitcoin prices would continue to go higher and higher, with slumps that are nothing more than buying opportunities. Lastly, regulators on all levels do not show any desire or need to crack down on these processes, just like the political establishment, which fully supports this new branch of digital economics.

Difficult Scenario

With a price of a single BTC token standing at 4 million USD, the market cap of this digital currency would be some eight times bigger than all of the gold above ground. Its market capitalization is estimated at 11.5 trillion USD. So, if the bitcoin token was to reach that point, its price would need to be somewhere around 547,000 USD. This alone shows just how the original scenario from Chowdhry is, no matter how exciting it might sound to the members of the crypto community.

Source: Forbes