Bitcoin will go to $1M / Why other cryptos won't (part 1)

in LeoFinance6 months ago

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Better form of Money

The numbers keep being thrown out there. $1M, $5M, even $10M for a single Bitcoin in the next 10 years. And the numbers can back it up. The first comparison we've all heard is that Bitcoin will match gold. Bitcoin is digital gold. It is a better form of money and a better store-of-value than gold and it has a finite supply, which gold doesn't. It is cheap to store, cheap to move, and easily divisible into small units. The market cap of gold is approximately $11T according to my google search 15 seconds ago. 21 million BTC into $11T puts the bitcoin price at just over $520,000 per coin.

Trillions looking for a home

Next we have balance sheet assets; liquid fiat available on company balance sheets across the globe. According to the WSJ in a Dec article, non-financial S&P 500 companies not in the financial sector had over $1.9T in cash. This is just cash. Not other liquid assets like bonds and stocks. And this is also just the US. Banks also took in over $2T in deposits in the first half of 2020 alone according to this report. Again, this is just cash and it doesn't include the rest of the markets or the rest of the world. Best estimates are that there is anywhere from $100T to as much as $300T of liquid capital globally looking to find a place they can "park" their capital where the current moneyprinting environment doesn't devalue it by half over the next few years. Those dollar amounts go up 50% if governments keep printing money.

Ultimately, I read that there is $2.1 Quadrillion of financial energy world-wide in all its many forms. If the vast majority of that energy is in danger of being devalued, how much will flow into an asset that continues to grow at well over 100% a year and is a better form of money? Well, 1% is $21T. That's a $1M bitcoin. 5% is a $5M bitcoin. In other words, because of Bitcoin's unique properties (digital, fungible, divisible, storable, transferable), it can absorb capital from many different directions. And because of it's finite supply, the only variable that can change to relieve pressure is price.

Corporations keep buying

That's the big picture, on a smaller scale, corporations continue to wade in to give themselves exposure. Everyone knows about the Microstrategys and the Teslas of the world, but there are many other companies around the globe announcing almost daily they've purchased a stake. This will continue to accelerate. There are also the huge pensions, insurance companies, foundations, etc. that can't even look at an asset class until it breaches the $1T market cap level. That just happened in the last month. Considering Bitcoin wasn't anywhere near this level three months ago, I doubt very strongly any of these behemoths have even started looking at buying bitcoin. It will probably be at least another year before you see any of them make a move. At least.

Bitcoin IS the technology

So, that's where the money can come from but why Bitcoin? Why not Ethereum or Chainlink or Uniswap or BNB or one of Bitcoins many forks? Well, apart from the reasons I gave above, Bitcoin is not a new technology. Bitcoin IS the new technology. It is a financial network used to store financial energy. Bitcoin is electricity. Bitcoin is the internet. The rest of the crypto world has basically tried to use electricity and the internet to create value. And they have succeeded in many, many ways. But like I said, where they all try to BE something and ADD something, Bitcoin just IS. It's been attacked. It's been derided. It's been forked. And yet it still IS.

And it's going to a Million.

Thanks for reading. Comments welcomed and appreciated. If you like the content, please consider an upvote and rehive. Tomorrow I'll post part two where I talk about why other cryptocurrencies can not match the levels Bitcoin will achieve.

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As always, I'm not a financial advisor and this is not financial advice. Cryptocurrencies can and do go up and down and you could lose all your money. Do your own research.

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The thing is that it doesnt take $21T for the market cap to jump to $21T. Hence, there is a lot more upside than people imagine.

That said, I think the problem with this analysis is that Bitcoin biggest strength, its store of value, is not as important in a rapidly deflationary world. Whether one calls something new technology or not, there is no doubt the impact of technology on things. Anyone who pays attention is seeing the onset of this being laid as industries such as healthcare, education, and construction about to get blasted like they never saw before. Disruption is going to take place on the scale of hundreds of trillions of dollars.

Any analysis that overlooks this major point is bound to be off.

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While I agree that if you just took $21T and bought BTC the price would be much higher than $1M, in reality there will be a LOT of selling on the way up as well. There's $50B that has changed hands in the last 24 hrs and that number is fairly consistent, some days much higher. In 30 days that's $1.5T in volume. Many of these coins will end up trading many multiples of times at different prices along the way. But a lot of it will be the same dollars as well, flowing into and out of the market. Either way, it's going to take many trillions of dollars to get Bitcoin to a million.

As for the deflationary aspect, you are, of course, correct about that. The real question becomes how soon and how dramatically that affects those industries. Will 3D printing take a 50% market share in the next 5 years? 5%? 25%? There's no way of knowing right now. How fast can they make the printers and how fast can people be trained up to use them? What kind of structural problems might they face 5 years after being built/printed? How will they be insured? Who will insure them? While I agree the tech is coming, there will be many, many questions and problems that need to get answered and solved before it becomes mainstream. I would think the main focus for the foreseeable future will be on proving the quality and durability of the builds. They'll probably stick with the low-income housing and government contracts for at least the next few years before branching out into the regular residential market. I could be wrong but, as you say, it could be such a huge disruption I have a hard time believing the powers-that-be are going to allow it to just decimate an entire industry overnight.

Lastly, while I get a deflationary environment won't erode the purchasing power of cash by the same degree, you still can't argue with an asset increasing by 100% year over year vs any other investment vehicle out there. There will still be a huge demand to own bitcoin. Just my thoughts....

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Lastly, while I get a deflationary environment won't erode the purchasing power of cash by the same degree, you still can't argue with an asset increasing by 100% year over year vs any other investment vehicle out there. There will still be a huge demand to own bitcoin.

I agree with you there will be huge demand for Bitcoin. But you just changed the idea of the what drives adoption of Bitcoin. Now we are discussing the speculative nature of the token which I agree is going to be there. In fact, that is why these companies are going piling in. They are not using it as a hedge since these companies have dozens of ways to do that. They are buying it because the price is going up.

Of course, will Bitcoin be the only one to do that? I have a feeling we are going to see many tokens starting to put together runs like Bitcoin has.

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Of course, will Bitcoin be the only one to do that? I have a feeling we are going to see many tokens starting to put together runs like Bitcoin has.

This is where I think I disagree with you. My post tomorrow will give my reasons why. While I think there will eventually be tokens that can make these major runs. I think there need to be some pretty major developments in the space for it to happen. I can't remember where I wrote it (possibly tomorrow's piece) but, personally, I don't think the coin to rival Bitcoin has been created yet. I'm not saying it can't or won't happen, I just don't think it's happened yet. It's all about "value", which is what I talk about in part 2....

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Good article well here's my thoughts on this. If Bitcoin goes to a million it won't hold a million. Only way that happens and it holds a million is i think the dollar is on the verge of collapse. Then it can go to anything. Also we should be mindful its a big difference in the market cap of cryptos at $1 trillion and them at $21 trillion. So i don't expect btc to get anywhere near a million and if it does we're looking at apocalyptic conditions.

The other part i'd add is bitcoin is only going up because of its speculative gambling nature, lol. There is no other reason. There is no utilized reason why. It's complete baloney. Now the real value is in blockchain technology. That doesn't necessarily mean you own some crypto that goes to the moon. Nothing of value gets built on bitcoin or utilized this is why they have to designate it as a store of value as it doesn't do anything else lol. It can't do anything else which is a misunderstanding of the complete full encompassing development of store of value.

Yes gold is a store of value but that was based on it's ability over the ages as an effective money that was used in addition to that to other things. So it then had an accepted overall development. Bitcoin is not even close to that, lol. We mostly use bitcoin to buy altcoins. There is no real other use for btc because people think they going to get rich. It's laughable but everyone will try to get their money before the laughing stops.

i see you have a part 2.. i'll save the rest for that.

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Thanks for the feedback. While I disagree with a lot of your points, I do see how many still view it as a complete speculative bubble. Personally, I think bitcoin is a better form of money and a better store of value than gold for the reasons I laid out in the article. When you say nothing of value gets built on Bitcoin I don't necessarily disagree. I just disagree with your premise that it NEEDS it. The value of Bitcoin is the safe, secure, immutable, uncensorable, network they've built with a finite supply. Nothing like it has ever existed. Compared to our current financial system, it allows people to place assets inside that network without having to worry about them ever being inflated out of existence. You also say "apocalyptic conditions" as if that is a very far-fetched idea. I don't think it's as crazy as that. While it may not be armageddon, the complete meltdown of the current global financial system is not as far off as it may seem. With continued money printing it is not so difficult to see a point where that debt can never be repaid. We may have already reached that point. If and when that happens, owning something that has a finite supply with a global network and the ability to be moved at the speed of light could have an astronomical value. Time will tell....

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Hey i got a chance to comment on your part 2 as well. I would say i agree with you. I'd however change the statement to the idea of bitcoin being better than gold or money.. The "idea" which can be greatly different than what btc is. Many developers have this notion of bitcoin should never be improved. Now i don't know if thats what Satoshi wanted or not. I don't think even what Satoshi discussed about bitcoin is anything like the interpretation we get today.

However i would say btc doesn't seem to fit well in a good future narrative of a better money. Now please don't mistake that for saying a secure immutable censorship resistant product on the chain is not useful in our monetary systems. Absolutely they are. .Just not in the form of bitcoin. We're moving into a very interesting advanced future. Bitcoin is not only wasteful but its proving to be not much better than our standard monetary systems. We have institutions now and banks controlling vast amounts of bitcoin. This sets up the same scenario of what we got with our imbalanced economic systems today. We have millenials who will be the future determing factor of how well btc does. We have them saying well its too wasteful and it does'nt create true economic prosperity and we want green energy. We're finding out capitalism or atleast the form we practice isn't congruent with our thoughts and beliefs so we need some hybrid something or another. So the more this goes on products like btc goes further out of their scopes and thats whats happening. So i'm not saying btc wont remain relevant to some degree or valuable. However i would say there are many danger signs that suggest btc will not be the accepted crypto to this magnitude in the future.

Thanks for responding back.

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