In the last decade, the S&P 500 (^GSPC +1.20%) has produced a total return of 224%. While this is a respectable gain, Bitcoin (BTC 2.02%) has fared much better. Since mid-March 2015, the world's top cryptocurrency has skyrocketed a jaw-dropping 29,690% (as of March 12).
Despite a volatile journey that has seen multiple price dips, like the one we are currently witnessing, the leading digital asset has been a fantastic wealth generator for investors. But where will Bitcoin be in 10 years?
Going mainstream
Bitcoin has had a long journey to get it to its current position as a $1.6 trillion asset. Numerous different exchanges, as well as financial services providers, have added functionality that allowed more individuals to buy and hold it. It has dealt with many huge drawdowns due to waning investor interest, only to bounce back stronger than ever to reach higher highs.
Bitcoin has never been hacked. And about every four years, it has successfully undergone a halving, demonstrating that the network is working as planned.
In the second half of 2020, we saw corporations like Strategy (formerly known as MicroStrategy) and Block start adding Bitcoin to their balance sheets. Tesla joined in on the action in early 2021. That same year, El Salvador became the first country to adopt Bitcoin as legal tender.
In January 2024, the Securities and Exchange Commission approved spot Bitcoin ETFs, which was a highly anticipated move. This was a huge step forward that solidified Bitcoin's position as a legitimate financial asset.
And during last year's presidential election, it became clear Bitcoin had caught the attention of politicians in Washington. Then-presidential candidate Donald Trump was the keynote speaker at the Bitcoin conference last summer, showcasing how important it was to win over crypto's supporters.
CRYPTO: BTC
Key Data Points
A bright future
Perhaps the biggest argument that the naysayers had was that the U.S. government would eventually ban Bitcoin. It would make it illegal to own, trade, and mine it, effectively pressuring demand from the world's largest economy. The thinking was that such a move would negatively impact Bitcoin's price.
That important risk factor is beginning to look like less of a worry these days. On March 6, President Donald Trump signed an executive order announcing the creation of a Bitcoin Strategic Reserve. It will be funded with the coins the U.S. already owns from criminal or civil asset forfeiture proceedings. The government can also find budget-neutral ways to acquire more Bitcoin. What's more, under the terms of the order, no Bitcoin in the reserve will be sold.
This move can be viewed as a huge win for the Bitcoin bulls. The world's largest economy has now made it clear that it wants to own the digital asset, which could set off a race among other countries to do the same, leading to buying pressure.
This makes it easy to believe that Bitcoin has a bright future, particularly as a more popular store-of-value asset. Its fixed supply of 21 million coins, supporting absolute scarcity, is the most important characteristic that can drive more interest among investors who want to own an asset that can't be debased.
Gold is often viewed in comparison. The value of all the precious metal aboveground is estimated to be $20 trillion. Assuming Bitcoin appreciates to this level, there is 1,150% upside from the current level of a $1.6 trillion market cap.
However, this view could be conservative. Bitcoin is superior to gold in multiple ways, as it's verifiable, portable, and divisible.
In the past decade, Bitcoin's price skyrocketed almost 30,000%. While I don't think it's reasonable to assume a similar type of gain in the next 10 years, I am confident the price will be substantially higher in 2035.
