Bitcoin’s recent all-time high, coupled with the upcoming halving, has intensified speculation about its potential to reach $1M. If Bitcoin (BTC) goes to $1M, aka 16xes from it’s current price of ~$63K at the time of writing, who makes all of the money and who loses?
Currently, around 900 BTC are issued daily, but post-halving, this will drop to 450 BTC. So, an entire year of Bitcoin issuance could be added in 12 trading sessions by the Bitcoin ETFs alone (Arch Lending), significantly impacting market dynamics and ETF contributions. A $1M Bitcoin would elevate Bitcoin’s market capitalization beyond $20 trillion (21M Bitcoin supply cap), making it a globally dominant asset.
This price surge would likely be caused by a lot of catalysts that are discussed by many in crypto circles (in no particular order):
- Bitcoin becomes a fundamental asset on the balance sheets of Global 2000 companies
- Over ten countries adopt Bitcoin as an official currency (11 currently have the USD as an official currency and 2 have Bitcoin as legal tender – El Salvador and Central African Republic)
- Certain countries emerge as safe havens for converting large Bitcoin amounts to fiat (similar to today’s tax havens)
- Governments buying Bitcoin as a security measure to protect the network, challenge central bank dominance, and impact traditional monetary policies
- Bitcoin evolves into a key instrument for international settlements
- Bitcoin surpasses gold as the preferred store of value
- Bitcoin’s market volatility will affect its perception as a store of value vs. a commodity or currency, affecting adoption decisions. However, technological improvements like the Lightning Network could enhance its usability for daily transactions by improving scalability and reducing costs
- Ethereum reaches $30K, maintaining its value at approximately 30% of Bitcoin’s market cap
This would cause inflation (duh!) The $6T stimulus grew inflation by 6.5x from 2020 to 2022, and adding $18T to Bitcion’s market cap over the next few years would have an inflationary effect. Although the effects will be spread globablly and not just to the US population.
Despite Bitcoin being far more efficient than gold in terms of portability, scarcity, and divisibility, its market cap of $1.3T significantly trails gold’s 14.5T, suggesting room for growth (Bitcoin price at Gold parity = $780K). However, getting to $1M is a lot of growth; it’s adding the top 10 global companies by market cap (~$18T) to the current market cap. Since over 92% of Bitcoin have already been mined, a massive price increase is what will get the market cap to $20T. This is a massive number; 90% of America’s GDP.
The increased global adoption will draw increased regulatory attention, possibly resulting in stricter controls or bans. Bitcoin is quasi-fungible. Various deny-lists could pop up that have certain bitcoin flagged as involved in illegal transactions or ones that you won’t be able to access easily. Plus, as countries lose a grasp on monetary policy measures, having more control over crypto and who can spend Bitcoin.
This challenge to traditional power structures might lead to the feasibility of innovative governance models like network states or seasteading. Despite potential regulatory challenges, the global nature of Bitcoin might mitigate these hurdles.
However, the narrative around Bitcoin democratizing finance faces challenges, particularly around access and financial literacy, so the wealth gap might get widened further in the absence of taxation or other redistribution mechanisms. Also, a majority of current Bitcoin holders are young, middle-aged white men, pointing to a need for greater diversity and economic inclusion.
In essence, Bitcoin’s path to $1M, which seems more likely than ever, will likely happen over the span over a decade. Yet, it will redefine financial markets and test the adaptability of global economic systems, raising critical questions about value, security, and the future of currency.
unpublished alpha 