Investors who have decades-long time horizons and are serious about growing their portfolios can't ignore Bitcoin (BTC +2.81%) anymore. Its monumental rise to become a global financial asset is impressive.
The price of Bitcoin has rocketed 47,430% higher in the past decade (as of Sept. 29). This special performance would've turned a $1,000 starting investment into over $475,000 today. Despite the monster gain, there remains substantial upside for long-term investors looking to buy the world's most proven cryptocurrency.
Where will Bitcoin be in 10 years? The answer might surprise you.
Where we are today
Next January will mark 17 years since Bitcoin's first block was mined. The longer that the network keeps operating, the more confidence people will have in its staying power. And at this point in its lifecycle, Bitcoin can no longer be written off. Important power players on Wall Street and in Washington D.C. are showing their support, whether by their words or by their actions, for Bitcoin. That bodes well for its future.
Wall Street companies want to find ways to better serve their clients, with a key focus on generating profits. If clients want exposure to Bitcoin, these companies find a way to provide it.
The huge success of spot Bitcoin ETFs provides a clear example. These are some of the most successful ETF launches in history. Blackrock's iShares Bitcoin Trust, which is the most popular one, will generate an estimated $219 million in revenue from fees on an annualized basis, based on its current asset base of $87.7 billion. This is a lucrative product.
The political climate has become more accommodating as well. The current U.S. presidential administration is fully embracing Bitcoin. It has introduced favorable regulation and set up a strategic Bitcoin reserve.
These trends focus on what's happening in the U.S. But it wouldn't be a surprise to see other countries follow in the footsteps of the world's most powerful economy, unless they want to get left behind.
CRYPTO: BTC
Key Data Points
Bitcoin in 2035 and beyond
Bitcoin is clearly on an impressive trajectory. By 2035, don't be surprised if its price rises approximately 11-fold, as the current market cap of $2.3 trillion reaches parity with gold's total value today of $25.9 trillion. I believe this is a probable outcome. While this translates to a spectacular annualized return of 27%, it comes up well short of Bitcoin's past returns. I believe this is a reasonable outlook to have.
Gold has the advantage of having been around for thousands of years, making it the most trusted and established store of value in the eyes of massive pools of capital. But that might be where its advantages end.
Bitcoin is easier to transact with and transport. It's divisible to the eighth decimal place. And because it's a public blockchain, it's easier to verify who owns what.
Most importantly, though, Bitcoin is scarcer. There will only ever be 21 million units in circulation. This hard supply cap can't be altered. On the other hand, if demand for gold suddenly shot up, it would become economically feasible to explore other mining techniques to grow the supply.
Bitcoin's price getting to more than $1.2 million by 2035 relies on the digital asset becoming more widely accepted as a store of value. Individuals, asset managers, companies, and governments will want to own it. As more wealth transfers from other asset classes, Bitcoin's price will keep rising.
There is even more upside. The world is becoming more digitally driven, particularly as the internet continues advancing and affecting our lives in more pronounced ways. This is playing out in front of our eyes, with the rise of artificial intelligence (AI). Bitcoin could play a role as a medium of exchange here, which will be its next phase of development.
This could take decades to play out. But it would support even more demand for Bitcoin -- and a higher price. As always, keep your own risk tolerances in mind, and use a diversified portfolio to help reduce risks.
