A Reddit user has posted his version of the maths required for a future $10 million Bitcoin valuation.
His assumptions are based on a number of factors including the global amount of millionaires, a $260 trillion stock and derivative market, and Bitcoin’s intrinsically scarce supply schedule.
BuyBitcoinWhileItsLo started his post by reminding people about the “fundamental fact that only 21 million Bitcoins will ever exist”, and that unlike the dollar (which can be printed continuously forever), a Bitcoin is infinitely divisible – “So no matter how expensive one coin gets, infinite fractions of it can be purchased and used.”
‘They all can’t grab a full Bitcoin’
BuyBitcoinWhileItsLo estimated that “there are 36 million millionaires in the world today”, and “by the time every one of them tries to grab a full Bitcoin when it becomes a must-have investment, there won’t be enough for all of them”.
In the Reddit post – which was titled “My best attempt to simplify the math of a 10 million dollar Bitcoin” – the user predicted that this would “easily push one coin past 1 million dollars in value when they [the millionaires] try to grab a whole coin”.
Regarding traditional markets, he said “there is $260 trillion in the global stock markets through stocks and derivatives”, or “what others call institutional money”.
“Once Bitcoin is allowed to be traded for stocks, that $260 trillion is open to be put behind Bitcoin.”
The Reddit user said that when this happens: “$260 trillion divided by 21 million Bitcoins puts one Bitcoin over $10 million a coin, or $12 million a coin to be exact.”
“This will likely happen in our lifetime. That makes every dollar invested even at an $11,000 price could be worth $1,000 in possibly 10 years at this rate.”
Scarcity by design
Moving on to the topic of Bitcoin’s supply schedule, BuyBitcoinWhileItsLo said: “Every four years the distribution of Bitcoin going out gets cut in half. So in the first four years 10.5 million Bitcoins went out, and the demand was small so the price was cheap – it went from less than a penny in 2009 to $1,000 in 2013 when it first halved.”
“That’s where we are now. So currently only 5.25 million Bitcoins are going out, which is why the price is running up since investors know this, and they always start to buy before a halving to grab coins before there is less to go out.”
‘Never buy during all-time highs’
The Reddit user said: “The next halving is next year – summer 2020. After that, only 2.125 million Bitcoins will be going out with $10 trillion in institutional markets being opened up. The potential is anywhere from $100,000 to $500,000 in the short term by late 2020 or early 2021, then another 80+% drop as usual.”
The Bitcoin bull concluded: “At the current prices, you’re in a good position to be fine after the next correction/drop that’ll come after the upcoming halving skyrockets the price. I for one won’t stop accumulating till we break $20,000. My golden rule is to never buy during all-time highs.”
Disclaimer: The views and opinions expressed by the author should not be considered as financial advice. We do not give advice on financial products.