Bitwise Chief Investment Officer: Bitcoin Breaking $1 Million Is Not a Dream! Revealing the Ultimate Formula Institutions Use to Price BTC

According to the latest investment memo released by asset management firm Bitwise on their official blog, Bitwise Chief Investment Officer Matt Hougan elaborates on why Bitcoin (BTC) has the potential to reach an astonishing $1 million per coin. Hougan points out that most people evaluating Bitcoin’s potential make a fundamental mistake by assuming the market size for value storage remains static; when considering fiat currency devaluation and the historical growth of the gold market, the $1 million target is actually “very reasonable.”
(Background: Arthur Hayes: I wouldn’t spend even $1 on Bitcoin, waiting for the Fed to print more money before entering)
(Additional context: The 20 millionth Bitcoin has been mined! The last one will be mined around 2140, officially entering a “super scarce” new era)

Table of Contents

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• Basic mathematical formula for calculating Bitcoin’s value
• Overlooked blind spot: the market is expanding wildly
• Institutional adoption accelerating, 17% market share is not out of reach

For many traditional investors, a Bitcoin worth $1 million means the current price would need to increase about 14 times, which sounds like a fantasy.

However, Bitwise Chief Investment Officer Matt Hougan recently admitted in his latest memo, “How Bitcoin Can Reach $1 Million,” that he once thought this number was absurd, but now his perspective has completely changed.

Basic Mathematical Formula for Calculating Bitcoin’s Value

Hougan views Bitcoin as an emerging “digital store of value” asset, similar to gold, allowing people to hold wealth outside traditional fiat and banking systems. Based on this framework, the basic mathematical formula for evaluating Bitcoin’s value is straightforward: estimate the total size of the global value storage market, project Bitcoin’s market share, and then divide by 21 million (Bitcoin’s fixed supply cap).

Currently, the global value storage market (including gold and Bitcoin) is just under $38 trillion, with gold accounting for $36 trillion and Bitcoin about $1.4 trillion. In other words, Bitcoin currently accounts for less than 4% of this market. Hougan explains that this is why $1 million sounds unreasonable — if the market size remains unchanged, Bitcoin would need to capture over 50% of the market share to reach that goal, which is a very high threshold.

Overlooked Blind Spot: The Market Is Expanding Rapidly

“This is the biggest blind spot most people overlook when talking about Bitcoin: the value storage market is not static,” Hougan points out.

Looking back, when the first U.S. gold ETF was launched in 2004, the entire gold market’s value was only about $2.5 trillion (not far from Bitcoin’s current market cap). But over the past 20 years, driven by concerns over government debt, geopolitical uncertainty, and loose monetary policies, gold’s market value has grown at a compound annual growth rate (CAGR) of 13%, now approaching $40 trillion.

Hougan emphasizes that if this growth driven by “fiat devaluation fears” continues, the global value storage market could expand to about $121 trillion in 10 years. In this scenario, Bitcoin would only need to capture 17% of the market share for each coin to be worth over $1 million.

Institutional Adoption Accelerating, 17% Market Share Is Not Out of Reach

Is it possible to grow from 4% to 17% market share? Hougan believes that, considering Bitcoin’s recent remarkable progress, this is “completely plausible.” A few years ago, Bitcoin lacked a U.S. spot ETF and institutional holders; now, Bitcoin ETFs have become the fastest-growing ETF product in history, with investors ranging from Harvard endowment funds to Abu Dhabi sovereign wealth funds buying in. As long-term volatility decreases, many professional investors are even considering increasing their Bitcoin allocations to 5%.

Despite potential risks like a correction in gold prices or market competition, Hougan concludes:

“As concerns over government debt reach crisis levels, the future growth of the value storage market could be faster than we expect. As long as the market continues to expand and Bitcoin continues to steadily gain market share, we will see prices that are vastly higher than today.”