With Bitcoin (BTC +0.13%) up more than 160% for the year, just about everyone in the crypto industry seems to be predicting a rally for other crypto tokens in 2024. That's a pattern we've seen over and over: Bitcoin rises and the rest of the market follows.
If you think that a crypto bull market is coming, then there's a potential fortune to be made in cryptocurrencies. So which crypto has the potential to make you a millionaire?
Bitcoin millionaires
The starting point for answering this question, of course, is Bitcoin itself. According to the latest Crypto Wealth Report from investment firm Henley & Partners, there are now 40,500 Bitcoin millionaires around the world. And if you really want to think big, there are six Bitcoin billionaires. Most of these investors realized the crypto opportunity early, scooped up Bitcoin when it was trading for less than $1,000, and simply held on, despite several major market crashes along the way (including last year, when Bitcoin lost 65% of its value).
CRYPTO: BTC
Key Data Points
While Bitcoin is a good starting point for thinking about what makes a millionaire crypto, I don't think Bitcoin is the answer in 2024. The reason, quite simply, is that you've already missed out on an extraordinary run by Bitcoin that may never be repeated. Over the 10-year period from 2011 to 2021, Bitcoin was the single best-performing asset in the world. At today's price of nearly $44,000, Bitcoin is up a head-spinning 43,187% since 2013. Does anyone really expect Bitcoin to turn in the same performance over the next decade?
10x, 100x, or 1000x?
Within the crypto industry, it's commonplace to talk about different crypto tokens in terms of whether they have 10-fold, 100-fold, or 1,000-fold upside potential. Obviously, the higher the multiple, the greater your chances of ever becoming a crypto millionaire. A higher multiple means more fuel for your rocketship to the moon. However, given the trade-off between risk and reward, it also implies that a coin with the potential to rise 1000-fold has a lot more risk than one with 10-fold potential.
At one time, Bitcoin had 1,000-fold upside potential. But that was back in 2017, when Bitcoin was still trading for less than $1,000. That's when people first started talking seriously about Bitcoin reaching a $1 million price. The math was simple: If Bitcoin trades at $1,000 and it rises 1,000-fold, then you're a millionaire.
But now, Bitcoin may only have 10-fold upside potential. If you're being extremely optimistic, it might have 25-fold upside potential. Again, it's just simple math. At today's price of $44,000, a 25-fold rise implies a future price of $1 million. It's hard to find any long-term Bitcoin price estimates of more than $1 million.
The $1,000 problem
When looking for a millionaire-making crypto, you also have to think in terms of the capital that you can put to work. And most people don't have a lot of extra cash to allocate to a speculative investment that may not make them rich. According to The Ascent (a service of The Motley Fool), the median American's savings account balance is $1,200. To make the math work, let's just call this $1,000.
Image source: Getty Images.
If you decide to put all $1,000 of that hard-earned savings to work in the crypto market (a highly risky move!), you can immediately see why investing in a crypto that rises 10 times or even 100 times simply won't do the trick. A 10-fold gain would only get you to $10,000, while a 100-fold rise would get you to $100,000. The math is brutal: If all you have to deploy is $1,000, then you need to find a crypto that might rise 1,000-fold. That is simply the only way to get to $1 million from a $1,000 investment.
What does a 1000x crypto look like?
So where can you find such a crypto? Most likely, this crypto will look a lot like Bitcoin when it first launched in 2009. Back then, most people couldn't imagine how big Bitcoin could possibly become. The idea of digital money was still in its early stages.
So the task is to find some niche of the crypto market that is still in its nascent stages. Today, those opportunities might involve artificial intelligence (AI). Find the one crypto that is best able to leverage the potential of AI, and you could find the next crypto with 1000-fold possibilities. Right now, I'd be keeping a close eye on what's happening with OpenAI, Microsoft (MSFT 1.33%), and Elon Musk's new AI venture. I'd also be hunting through resources like the "AI & Big Data Tokens" tab on CoinMarketCap, which provides a listing of all AI-related tokens sorted by market cap.
Diamond hands
Once you find the right crypto, that's when the hard work really begins. That's because you have to be willing to hold on to that crypto no matter what the market is doing around you. That's how the first Bitcoin millionaires became so wealthy.
They developed a culture of holding (known as HODLing in crypto lingo) for the long term, and they created all kinds of interesting metaphors to describe how difficult it might be to hold during a severe market downturn. My personal favorite is "diamond hands" -- it powerfully sums up how strong you need to be to hold on to something when everyone around you is telling you to sell.
The next Bitcoin?
The fact that there are so many Bitcoin millionaires out there should give you reason for hope. Literally tens of thousands of people have cracked the code to becoming a crypto millionaire: Get in early on a huge potential opportunity, hold on to that investment for dear life, and then wait patiently for it to gain in value over the long haul. Now, nearly 15 years after Bitcoin was introduced, it's time to find the next big crypto millionaire maker.
