Editor's Note: This article has been edited to clarify that Jurrien Timmer did not predict that Bitcoin could reach $1 billion by 2038 but instead posed a hypothetical valuation based on a stock-to-flow model.
With Bitcoin (BTC +1.43%) surging past the $70,000 price level to set a new all-time high, crypto investors are naturally starting to wonder just how much higher it can go. Cathie Wood of Ark Invest is now predicting that Bitcoin could hit a price of $1 million before 2030, so there is a very real possibility that some of these investors could one day become crypto millionaires.
But does Bitcoin have the potential to be a billionaire-maker? In other words, by making a very modest investment in Bitcoin right now, is it ever possible that you could become a billionaire? Let's take a closer look at what would need to happen.
Bitcoin's historical returns
The starting point for considering Bitcoin's "billionaire-maker" potential is analyzing its historical returns. By just about any standard possible, these returns have been eye-popping. Considering that Bitcoin first broke through the $1 mark in February 2011, it is remarkable that Bitcoin is now trading around $70,000 just 13 years later.
CRYPTO: BTC
Key Data Points
The numbers are even more impressive when you stack them up against the performance of other asset classes. During the period from 2011 to 2021, Bitcoin was the single best-performing asset class in the world. During that time period, Bitcoin had annualized returns of 230% per year, compared to just 20% per year for high-growth tech stocks.
Obviously, there's danger in extrapolating too much from these numbers. After all, past performance is no guarantee of future performance. That being said, Bitcoin returned 150% last year, and is up another 70% this year. So while Bitcoin may no longer deliver the types of 230% annualized returns that it did during its heyday, it still has the potential to deliver tremendous potential upside.
Bitcoin future price predictions
With these historical returns as a starting point, it's then possible to consider just how much higher Bitcoin might go in the future. The one price prediction that everyone is talking about is the one made by Cathie Wood of Ark Invest. In early 2022, she predicted that Bitcoin would hit a future price of $1 million by the year 2030. She increased that prediction to $1.48 million in 2023, and then to $2.3 million in 2024.
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And there are plenty of investment managers and fund strategists who offer even more aggressive price predictions for just how much higher Bitcoin might go. According to Tom Lee, managing partner and head of research for Fundstrat Global Advisors, Bitcoin could hit a price of $10 million within the next 25 years.
During the peak of the last Bitcoin bull market rally, Jurrien Timmer, Director of Global Macro for Fidelity Investments, showed a hypothetical valuation leveraging gold’s stock-to-flow model, showing that Bitcoin could hit a price of $1 million by the year 2055. This is obviously a highly hypothetical valuation, but it does introduce a very tantalizing possibility.
All the wealth in the world?
The only problem, of course, is that there are some very real-world constraints on just how much higher Bitcoin can go. For example, consider a number known as the Global Investable Asset Base. This describes the total amount of wealth that can be invested in the world. According to Ark Invest, this number is currently $250 trillion.
This number is significant because Ark Invest thinks that close to 20% of the world's Global Investable Asset Base could one day be invested in Bitcoin. According to Cathie Wood, that massive new influx of money could be the key factor that sends Bitcoin soaring to $2.3 million.
For the sake of our "billionaire-maker" thought experiment, let's consider this to be the upper boundary for the price of Bitcoin. It's hard to imagine more than 20% of the world's wealth being invested in Bitcoin, and even this allocation might strike some as outlandish.
But at least it gives us a roadmap of how to get to $1 billion. If Bitcoin eventually hits a price of $2 million, then you would need to hold 500 bitcoins to become a billionaire. At today's prices, that would imply an investment of roughly $35 million.
Will you become a Bitcoin billionaire?
While the chances of becoming a Bitcoin billionaire are unlikely (unless you happen to have $35 million hiding under your mattress at home), they are not impossible. According to the latest Crypto Wealth Report, there were six Bitcoin billionaires in the world at the end of 2023. Most likely, these are investors who recognized the future potential of Bitcoin when it was trading for just $1, and then held on for dear life as it hit new all-time high after new all-time high over the next decade.
If Bitcoin soars from $70,000 to $1 million, it might still be possible to see a more than 10x return on your crypto investment. However, the days of 100x and 1,000x returns may be over, and that would limit your chances of becoming a crypto billionaire. That being said, I'm sure not many people would quibble with the prospect of becoming a crypto millionaire instead.
