TLDR
- Matt Hougan, Bitwise’s Chief Investment Officer, projects Bitcoin reaching $1 million per coin
- The store-of-value market globally stands at approximately $38 trillion
- Bitcoin currently commands under 4% of this market
- A 17% share of the anticipated $121 trillion market would push Bitcoin to $1 million
- Institutional adoption and spot Bitcoin ETFs strengthen the long-term outlook
Matt Hougan, serving as Chief Investment Officer at Bitwise, has reaffirmed his projection that Bitcoin may eventually trade at $1 million per coin. His analysis appeared in a memo this week titled “How Bitcoin Gets to $1 Million.”
The foundation of Hougan’s thesis centers on the global store-of-value market — encompassing assets individuals acquire to maintain wealth across time. Gold dominates this category.
Current valuations place the store-of-value market at just under $38 trillion. Gold comprises approximately $36 trillion of this total, whereas Bitcoin represents around $1.4 trillion, equating to under 4% of the entire market.
According to Hougan, investors frequently undervalue Bitcoin by overlooking the rapid expansion of the store-of-value market itself. When the first gold ETF debuted in the United States in 2004, gold’s market valuation stood at roughly $2.5 trillion. Today, it has expanded to nearly $40 trillion — representing a compound annual growth rate of approximately 13%.
Hougan attributes this expansion to mounting government debt, escalating geopolitical tensions, and accommodative monetary policies.
How Bitcoin Gets to $1 Million
Assuming the store-of-value market maintains comparable growth rates, Hougan projects it could expand to $121 trillion within ten years. At that scale, Bitcoin would require approximately 17% market penetration to achieve $1 million per coin.
Presently, Bitcoin would need to capture over 50% of the existing market to reach that valuation. Hougan’s projection relies on market expansion rather than Bitcoin achieving majority dominance.
He cites recent market developments as indicators supporting this trajectory. Several years ago, spot Bitcoin ETFs were unavailable in the United States. Today, they rank among the most rapidly growing ETF products ever launched.
Institutional participation has accelerated recently. Harvard’s endowment fund and Abu Dhabi’s sovereign wealth fund have both incorporated Bitcoin into their investment portfolios.
Bitcoin’s Volatility Has Been Declining
Hougan highlighted that Bitcoin’s long-term volatility has been decreasing. Consequently, professional investors are considering allocations around 5%, compared to earlier recommendations near 1%.
Hougan acknowledges potential risks. The store-of-value market might not maintain its growth trajectory, and Bitcoin may fail to increase its market share.
He also mentioned that projections might prove “too conservative” should anxieties regarding government debt and currency debasement intensify.
Hougan has presented this analysis previously. In a 2023 memo, he projected Bitcoin could surpass $1 million by 2032. Last month, he suggested it might reach $6.5 million within the next two decades.
Based on Hougan’s current data, Bitcoin accounts for under 4% of the worldwide store-of-value market.
