Seven years ago, Bitcoin was worth only $400, and in another seven, it might be worth more than one million.
Known for their love of innovation and disruptive technologies, Cathie Wood and her team at Ark Invest are natural fans of Bitcoin (BTC 3.52%). They believe the world's first cryptocurrency has the potential to revolutionize financial markets and even the idea of money itself.
Their confidence in Bitcoin is so strong that analysts at Ark Invest released a report claiming that its price could be worth more than $1 million by 2030.
But for Bitcoin to get to that level, it would need to increase by more than 4,000% in just seven years. Although Bitcoin is no stranger to massive runs, this prediction seems outlandish at first glance. Fortunately for us, Ark's analyst provided a detailed synopsis of just how Bitcoin could get to the million-dollar mark.
There's more to Bitcoin than just its price
One of the primary reasons Ark believes Bitcoin will continue to ascend in price is due to its consistent growth in its network's fundamentals. Similar to earnings reports for companies, data on Bitcoin's blockchain can be evaluated to gauge health and growth.
To capture this, analysts evaluated blockchain metrics on three different occasions when Bitcoin's price was at $15,800. This price is important because it was the lowest price Bitcoin fell to in the current bear market, reaching that bottom price in November 2022.
The other two times were on December 2017, which was an all-time high at that point, and then after a bear market that spanned most of 2018 and 2019. That downturn sent Bitcoin prices down as low as $3,100 before climbing back to $15,800 in November 2020.
Ark evaluated metrics like hash rate (a statistic that quantifies Bitcoin's computing power), the total supply of Bitcoin that hadn't moved in the past year (a gauge to measure investor behavior), and the number of Bitcoin addresses with a non-zero balance (a figure that helps assess network growth).
Despite reaching this $15,800 price on three separate occasions, these metrics were shown to have grown significantly. Here is a breakdown of each of those metrics at these different points in time:
Metric | Dec. 2017 | Nov. 2020 | Nov. 2022 |
|---|---|---|---|
Hash Rate (EH/s) | 12.6 | 127.8 | 262.4 |
Supply of BTC Last Moved >1 Year Ago (%) | 44.1% | 61.8% | 66.5% |
BTC Addresses With Non-Zero Balance (Millions) | 24 | 32.6 | 43.5 |
When analyzing Bitcoin from this angle, rather than just its price, a few things become clear. First, Bitcoin's network computing power continues to strengthen, a sign that it is becoming more decentralized and secure with time. Second, investors are holding Bitcoin for longer, and this trend is typically viewed as an indication of their confidence that prices will increase in the future. And lastly, the number of addresses has nearly doubled in just five years, which shows that the network has been experiencing exponential growth. Ark believes this combination of the Bitcoin network's resilience and growth, even in the midst of bear markets, will continue into the future and provide the fuel for it to reach new all-time highs.
Good, better, and best-case scenarios
But how high can Bitcoin actually go? To quantify just how explosive this growth could be, Ark presented three separate scenarios for Bitcoin's journey up to 2030. They divided the three into a bear case (the worst scenario), a base case, and a bull case (the best scenario).
For the bear case, Ark believes Bitcoin could be worth around $258,500. The base case projects a value of $682,000. And the bull case, a whopping $1.48 million.
Just because Ark thinks a $1.48 million price tag is in the cards doesn't guarantee it will happen. Even though it would be nice to see, the firm doesn't have a crystal ball that predicts the future. But their analysis of Bitcoin's network at three different points provides a compelling case that bear markets and crypto winters are just minor obstacles in Bitcoin's path of price ascension.
Only time will tell if Ark's analysis proves to be true. With its hash rate, supply last moved more than a year ago, and the number of non-zero balances all sitting at near all-time highs, purchasing Bitcoin today looks as alluring as ever, as the price remains down more than 65% from its peak of $68,000.
RJ Fulton has positions in Bitcoin. The Motley Fool has positions in and recommends Bitcoin. The Motley Fool has a disclosure policy.
