At the Token2049 cryptocurrency conference in Dubai on April 30, Arthur Hayes, the co-founder of the BitMEX cryptocurrency exchange, made a bold prediction about the future of Bitcoin (CRYPTO: BTC).
"Don't worry," Hayes said, "Bitcoin will reach $1 million by 2028." He is not the only prominent figure in the cryptocurrency space making similar predictions, give or take a few years.
Is Hayes correct? Let’s analyze the numbers here and assess whether Bitcoin can actually reach $1 million in the next three years.
It's much more practical than what you hear.
Currently, Bitcoin is priced at around $96,000. Therefore, it needs to grow 10.4 times to reach a price of $1 million per coin. For most assets, this is impossible.
In the past five years, the price of this coin has increased by 949%. Thus, there is a recent precedent showing that the scale of growth is within a reasonable range to achieve the mentioned price target, although over a slightly longer period than the three-year timeline we are considering here.
Let's approach this issue from a slightly different angle to better understand whether achieving the goal is feasible. Today, the market capitalization of Bitcoin is $1.9 trillion. With an assumed price of $1 million per coin, with 20.5 million coins likely to be mined by 2028 (up from 19.8 million currently in circulation), Bitcoin's market capitalization would need to reach around $20.5 trillion.
For reference, as of the end of 2023, approximately $213 trillion is held in investment assets globally. If we assume that in the coming years, 2% of that money will be allocated to Bitcoin as institutional investors buy it to increase exposure, this would create about $4.2 trillion in inflow. When separated, it is clear that this is still not enough to push the market capitalization of this coin high enough to reach a price of $1 million per coin.
However, several factors will limit the liquid supply of Bitcoin that can be purchased, which could drive the price up due to scarcity. Specifically, countries are considering whether to implement Bitcoin storage, and if they do, they will take some supply off the market. Similarly, some large corporations are beginning to accumulate assets. They will not sell unless they truly need cash, as long as they think it will be worth more in the future than it is now.
Furthermore, Bitcoin's next halving will occur in early to mid-2028. Halving tends to cause some pre-purchases, pushing the price up, and then even more buying the following year when supply diminishes. Since Bitcoin supply will only become harder to create after each successive halving, the trend so far has been for prices to rise to higher levels before -- permanently.
No need to hold your breath.
In summary, under conducive conditions, there is a very high likelihood that Bitcoin could reach a price of $1 million per coin by 2028.
But it is more likely that it will achieve the same target in the following years, as 2028 is still quite early, and Bitcoin's main price mechanisms work strongest over a longer time. With all the geopolitical uncertainty in the world today, many things could happen in the next few years that would put the financial markets, including Bitcoin, on a roller coaster ride instead of allowing them to climb smoothly as investors would prefer.
The important thing here is not to be overly concerned with the exact price of the asset. This currency is a good investment regardless of whether it reaches $1 million in a few years or longer; the market dynamics driving Bitcoin will increase its price in the future, which should be your reason to invest, not its price exceeding some arbitrary milestone.
If the price of Bitcoin continues to rise in the long term - and this could happen due to its scarcity and supply-demand dynamics - then this currency is worth buying and holding regardless of whether Hayes' predictions are correct in the near future.
