A lot of investors think that the price of Bitcoin (CCC:BTC-USD) is going to end the year at $100,000.
I’m one of those folks. But the other day, when one of my analysts said, “Bitcoin’s price will hit $100K,” I responded by sarcastically joking, “Stop being so bearish!”
Because while our year-end price target for Bitcoin is $100,000, we believe that Bitcoin prices will soar much, much higher in the long run.
Like 5X higher.
That’s right. We think Bitcoin is going to $500,000.
And the rationale – as we’ve laid out before in these very issues – is simple.
Bitcoin, in its most fundamental form, is the digital version of gold. The gold market is an $11 trillion market. If Bitcoin gets that big, you’re talking an $11 trillion market on 21 million tokens, which implies a price per token of about $500,000.
Of course, that back-of-the-envelope math rests on the huge assumption that Bitcoin is, indeed, the digital version of gold.
But it looks like that may already be the case…
Just take a look at the chart below. The blue line tracks Bitcoin prices. The purple line tracks the 10-year Treasury yield, which is widely seen as the market’s dynamic proxy for inflation. And the green line tracks the price of gold.
The blue and purple lines correlate strongly to one another. The green line doesn’t correlate to either.
That’s super interesting. To us, it means that the market has already confirmed Bitcoin as the digital version of gold – and, indeed, as a superior version of gold.
Long story short, as inflation expectations rise, investors sell bonds, and the 10-year Treasury yield rises, too. To protect against that inflation, investors typically buy gold as a store of value. But this year, instead of buying gold, they’re buying Bitcoin.
Bitcoin has become the go-to hedge against inflation in 2021 – not gold.
This comes as no surprise to us. Fundamentally speaking, Bitcoin is better than gold.
The modern value of gold derives from scarcity. Sure, maybe once upon a time, gold was used to barter for goods, or used to make swords and shields. Not too long ago, it was used in some semiconductor chips.
But those days are gone. Today, gold is used for nothing. Its value is in the fact that it has finite supply, and therefore, is a good store of value.
But that is even more true for Bitcoin. There are, by definition, only 21 million Bitcoins in the world. There will never be more than that. Meanwhile, in the gold market, more gold mining efforts can always be put online to increase supply as demand increases.
In other words, Bitcoin has more scarcity than gold, and therefore, isn’t just the digital version of gold – it is a digital and superior version of gold.
Meanwhile, Bitcoin is digital, while gold is physical, and the whole world is pivoting toward digitization these days. Everything from media, shopping, and entertainment to communications, work, and health are digital.
Everything is digital.
In that world, money will inevitably become digital, too. Indeed, that’s already happening. Venmo, Cash App, PayPal, SoFi… all these digital money apps are soaring in usage right now, while the volume of cash transactions is plummeting.
Therefore, Bitcoin is gold made for the modern world. You can’t send gold through a social media platform, or a streaming service, or use it to buy goods online. But you can use Bitcoin for that.
To that extent, it’s easy to see why folks will ditch their physical store of value (gold) for a digital store of value (Bitcoin) – and why the Bitcoin market will become as big as (if not bigger than) the gold market.
This is already happening.
And that means Bitcoin prices will trend toward $500,000 long-term.
How long will it take to get there? No one really knows. Our best guess is about 10 years – and if so, you’re talking about an asset that will increase 10X in value in 10 years.
That’s an amazing return.
Indeed, it’s such an amazing return that my team and I have created an exclusive investment advisory dedicated entirely to cryptocurrency research called Crypto Investor Network.
Long story short, we’ve built a team of blockchain experts to analyze the crypto markets and pick the best long-term crypto investments – so that over the next 10 years, you’re not making just 10X returns on Bitcoin, but rather, something like 50X returns or greater on smaller altcoins.
Sounds impossible? It’s not. Click here to find out why 50X returns are more achievable than you might think.
On the date of publication, Luke Lango did not have (either directly or indirectly) any positions in the securities mentioned in this article.