Bitcoin's (BTC +2.57%) long-term track record is unbelievable. In the past 10 years, the world's top cryptocurrency has seen its price soar 37,000%. This means that a $10,000 investment made back in April 2015 would be worth an eye-popping $3.7 million today.
But there has been a lot of volatility along the way, to say the least. This is happening right now. Bitcoin currently trades more than 20% below its peak, as macro concerns propel risk-off sentiment from investors.
The future could still be bright, though. If you invest $10,000 in Bitcoin right now, what will it be worth in 10 years? There are three possible outcomes investors should think about.
Bear case
The bear case for Bitcoin centers on a few negative developments that could keep it from gaining broad adoption. Countries could put strict regulatory measures in place, even banning the use of Bitcoin. There could be technological issues that undermine the network's security, resulting in investors losing trust. For example, quantum computing might someday be used to crack Bitcoin's cryptography, making the network vulnerable to hackers and bad actors.
Competition could also be a factor. Maybe a new cryptocurrency comes onto the scene that builds on the properties of Bitcoin, drawing investor enthusiasm.
In this scenario, Bitcoin will fail to increase in relevance. And its price will remain under the $100,000 mark, where it is today, and fall.
Base case
The base case is more optimistic. During the next 10 years, there will more interest from individuals, institutions, and countries to buy and hold Bitcoin. This is already playing out, as large asset managers, and even the U.S. government, are interested in owning Bitcoin. The fact that this is a completely decentralized network with a fixed supply of units is incredibly attractive.
Regulations could also provide a more favorable environment for Bitcoin to advance. Additionally, the lightning network, a Layer-2 scaling solution, could support greater Bitcoin usage as a medium of exchange.
In this case, it wouldn't be surprising to see Bitcoin's price settle between $500,000 and $1 million by 2035.
CRYPTO: BTC
Key Data Points
Bull case
If numerous countries around the world start to adopt Bitcoin as a critical strategic reserve asset, Bitcoin's price can get a significant boost. This would introduce a great deal of buying pressure. And it would probably happen quickly, as no nation wants to be left behind.
As far as payments are concerned, Bitcoin might also make meaningful progress in everyday transactions, thanks to technology breakthroughs. Consequently, it could become more enmeshed in the global financial system, with a wide range of products and services built to support an extensive ecosystem.
The bull case implies enormous upside. Bitcoin's price could reach a seven-figure sum, say $5 million per coin, a decade from now.
Bitcoin 2035
It's impossible to predict what Bitcoin's price will be in 2035. However, I think it's a certainty that the future returns won't resemble the past. Investors should set more realistic expectations.
I believe that the bear case is very unlikely. Bitcoin has grown in relevance during the past 15 years. And its trajectory of becoming a more important financial asset on the global stage will probably continue.
The base case makes the most sense within a 10-year time frame. I wouldn't be surprised to see Bitcoin's price rise five- or 10-fold.
Bitcoin might start approaching the price targets mentioned in the bull case, but that could be decades away. A lot of variables need to fall into place. What's more, figuring out an accurate time frame is an impossible task.
I think running through scenarios like this can be a valuable exercise for investors. Understanding where Bitcoin is headed during the next 10 years in this manner will probably result in investors allocating a small portion of their overall portfolios to the top crypto because it still appears to have plenty of upside.
