Bitcoin's (BTC 0.44%) trailing-10-year return is magnificent. The world's first and most valuable cryptocurrency has seen its price catapult 28,000% higher (as of Nov. 20). This easily makes it one of the best portfolio additions for any investor during that time.
However, the good times aren't constant. And volatility is a real part of the story. Bitcoin is currently trading 27% below its record. There is certainly negative sentiment right now.
Investors still have reasons to be bullish as we look to the future. Where will Bitcoin be in 10 years?
Image source: Getty Images.
Look at the present with clear eyes
Before trying to make predictions about Bitcoin's price far into the future, it's important that investors assess the current situation. Looking at the present with clear eyes can be helpful, setting the stage for what could happen going forward.
There's an easy argument to be made that Bitcoin has become a less risky asset to own over time. Five or 10 years ago, this obviously wasn't the case. Bitcoin was viewed by many as a form of silly internet money that was mainly used by criminals looking to sidestep the mainstream financial system. There were very few people who could have thought it would become a legitimate financial asset.
These days, Bitcoin is benefiting from a more favorable regulatory environment. For instance, the current U.S. presidential administration has set up a strategic Bitcoin reserve. And there is a pro-crypto chairman running the Securities and Exchange Commission.
One of the biggest risks for Bitcoin was that the government would ban it. This is less of a concern these days. In fact, the risk might no longer be valid at all.
Another trend to consider is Bitcoin's integration with traditional financial institutions. Power players in Washington have embraced the digital asset. Companies on Wall Street have as well.
The Bitcoin spot exchange-traded funds (ETFs) are the most successful ETF launch in history. Combined, they currently hold well over $100 billion worth of Bitcoin. This is a clear indication of robust investor appetite, which has helped drive lots of revenue for major asset managers.
Another trend to pay attention to is volatility. Throughout its history, Bitcoin has experienced multiple drawdowns of more than 50%. But as the asset matures, its volatility has come down, which can help attract more investors who want a smoother journey.
CRYPTO: BTC
Key Data Points
Bitcoin in 2035
The reasonable and rational perspective is to believe that past and current trends will continue in the future. To be clear, though, Bitcoin's returns going forward won't even come close to what it achieved in the past. An asset that becomes more widely adopted naturally has less potential to attract more capital.
But there still remains significant upside for Bitcoin hodlers over the next 10 years. I wouldn't be surprised to see the crypto asset's price soar tenfold, helping it approach the $1 million mark.
The best comparison Bitcoin has is gold. Gold is a popular store of value, mainly due to its durability and scarcity. The value of all the precious metal above ground is estimated to be $28 trillion. It's not crazy to think that Bitcoin's market cap can get closer to this figure over time, maybe eventually exceeding it.
Besides being younger, which some might view as an indication that Bitcoin still has a lot to prove, the crypto is superior to gold in other ways. Bitcoin is even scarcer, with a hard cap of 21 million units that isn't likely to ever change. It's easier to transact with, thanks to various financial services that make paying with Bitcoin possible. Bitcoin is purely digital, so it's easy to transport.
Bitcoin's past gains are hard to overstate. But investors should be bullish about the future, too.
