Investing is extremely difficult because it's not always a smooth journey to strong returns. The market will occasionally test your conviction to see if you still have the right temperament to stay the course. This is exactly what Bitcoin (BTC +1.20%) holders have been experiencing.
The cryptocurrency that spearheaded the industry currently sports a market capitalization of $1.3 trillion. But its price has come crashing down, trading 47% off its peak (as of July 23).
We've seen this before. Bear markets eventually lead to bull markets, and this digital asset's long-term trajectory is still impressive. I believe there's a promising future here for patient investors.
Bitcoin will one day hit $1 million. It's only a matter of time.
Image source: Getty Images.
Can you wait 10 years?
In my view, it wouldn't be shocking to see Bitcoin's price grow from where it stands today ($65,000) to reach the coveted $1 million mark in a decade. If this happens, it means the world's dominant cryptocurrency rose by 1,438%. On an annualized basis, that figure translates to a 31% return.
In the past 10 years, Bitcoin's price has increased by 100-fold. Getting to $1 million by the summer of 2036 implies a much slower pace of growth. As a more mature asset, the deceleration is the right perspective to have.
Bitcoin's projected 15-fold gain would almost certainly outperform every other major asset class. This wouldn't be a surprise, given that it's still a relatively young technology that theoretically has massive upside.
CRYPTO: BTC
Key Data Points
The bull case
At a fundamental level, Bitcoin is a self-operating monetary network. It issues and distributes new currency without the need for a central bank or financial institutions. It relies on math and code to run.
However, before Bitcoin can become a more widely used medium of exchange, it must be fully adopted as a prominent store of value. This is what will mainly drive its value in the coming decade.
Here's where the comparison to gold adds insight. The current value of all above-ground gold is estimated to be $28.2 trillion. With its history as a leading store of value spanning thousands of years, the precious metal is well ahead of Bitcoin in terms of adoption for this use case. But this could change.
Bitcoin is scarcer, with a hard supply cap of 21 million units. It's easily portable. It can be used in transactional settings, and it's divisible to eight decimal places.
Moreover, the world is becoming more digital. Artificial intelligence is the next phase of technological development. This backdrop supports greater interest in Bitcoin.
It's not unreasonable to think that in 10 years, Bitcoin can capture 71% (and maybe more) of gold's current market value. This would result in a $1 million per-unit price tag.
