Central banks don’t buy it. Billionaire investor Ray Dalio doesn’t trust it as a safe haven. And Bitcoin is trading 44% below its October peak, while gold is near an all-time high.
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That is the background against which the Chief Investment Officer of Bitwise Asset Management advocates this Bitcoin could still reach $1 million per coin within ten years.
Another way to run the numbers
Most people who reject the $1 million prediction do so by pointing out what it would take for Bitcoin to consume half of gold’s current market value.
Matt Hougan says this is the wrong calculation. According to Hougan, the mistake is treating gold’s market cap as a fixed number rather than a moving number.
Gold has grown at roughly 13% per year since 2004, from $2.5 trillion to about $38 trillion – driven by rising concerns about sovereign debt, geopolitical tensions and loose monetary policy.
Hougan predicts that if gold’s trajectory holds, the broader store of value market will reach about $121 trillion within a decade.
At that scale, Bitcoin would only need 17% of the total – about one-sixth – to be valuable. $1 million per coin. That is a remarkably different question than the 50% that critics usually mention.
Hougan also pointed to institutional investment as a driving force. Exchange-traded funds, sovereign wealth funds, and growing portfolio allocations are all cited as forces that could increase Bitcoin’s market share over the next decade.
“There are still miles to go,” he wrote in a blog post, “but capturing a sixth of the value storage market in ten years does not seem extreme.”
The gap between thesis and graphs
The argument rests on Bitcoin becoming more like gold over time. That is not the case at the moment. Gold reached an all-time high above $5,327 per ounce in late January and remains within 2.2% of that level.
Bitcoin, on the other hand, is sliding. It has fallen sharply from its all-time highs, even as the macroeconomic conditions – debt worries, inflation uncertainty, geopolitical frictions – that typically lift gold are still strongly in play.
Research NYDIG directly addressed this gap in early March. Bitcoin doesn’t appear to be priced as a macro hedge, a sovereign risk hedge or an inflation trade, according to the firm’s global head of research.
This disconnect explains the frustration surrounding Bitcoin’s failure to track gold, despite the “digital gold” label that has followed it for years, according to NYDIG.
Dalio’s knockback
Dalio added his voice to the skeptical side earlier this month, arguing that gold remains a much stronger long-term store of value.
His reasoning: central banks buy gold, not Bitcoin. And Bitcoin, he said, trades less like a commodity hedge and more like a technology stock — something that follows risk appetite rather than counters it.
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Bitcoin and war between Iran and the US
Bitcoin’s recent price action tells the story clearly. An American-Israeli military attack on Iran late February triggered more than $300 million in crypto liquidations, pushing Bitcoin lower before a partial recovery followed signals that the conflict could be easing.
It moved with risk appetite, not against it – and that’s exactly the behavior Dalio and others point to when they argue that Bitcoin still has a long way to go before it deserves the golden comparison.
Featured image from Unsplash, chart from TradingView