What to Know
- Bitcoin holds under 4% of the $38 trillion store-of-value market
- Expanding global wealth preservation market could reach $121 trillion within decade
- Institutional adoption and bitcoin ETFs drive growing investor allocations globally
Bitcoin’s long-term price outlook has returned to the center of market discussions after a detailed memo from Bitwise Chief Investment Officer Matt Hougan outlined how the cryptocurrency could eventually reach a valuation of $1 million per coin as the global store-of-value market continues expanding over time.
In the memo titled How Bitcoin Gets to $1 Million, Hougan presented a framework for estimating Bitcoin’s potential value by examining the overall size of the store-of-value market and evaluating the portion of that market the digital asset could realistically capture as adoption continues to grow among investors.
According to Hougan, the current store-of-value market stands just under $38 trillion, a figure that includes approximately $36 trillion in gold and roughly $1.4 trillion represented by bitcoin, placing the cryptocurrency’s current share of the market at slightly below 4%.
Based on that structure, Hougan stated that bitcoin would need to capture more than 50% of the current store-of-value market in order to reach a price level of $1 million per coin under today’s market conditions.
However, Hougan noted that many investors underestimate bitcoin’s long-term potential because they often focus on the current market size rather than considering how the broader store-of-value market itself has expanded over time.
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Growth of Store-of-Value Market Shapes Bitcoin Valuation Outlook
Historical market data referenced in the memo shows that the store-of-value market has experienced significant expansion during the past two decades, particularly within the gold market, which represents the largest portion of global wealth preservation assets. When the first gold exchange-traded fund launched in the United States in 2004, Hougan wrote that the total gold market was valued at approximately $2.5 trillion.
Since that period, the gold market has expanded to nearly $40 trillion, reflecting a compound annual growth rate of roughly 13% during the past twenty years. Hougan attributed this expansion to several macroeconomic factors, including rising government debt levels across major economies, persistent geopolitical uncertainty, and extended periods of accommodative monetary policy that increased investor demand for assets capable of preserving long-term value.
Institutional Participation Expands Bitcoin Market Access
Hougan also pointed to several developments within the cryptocurrency sector that illustrate how institutional participation has expanded in recent years, noting that spot bitcoin exchange-traded funds have become the fastest-growing ETFs in history while major institutional investors such as the Harvard endowment and the Abu Dhabi sovereign wealth fund have added exposure to the asset.
At the same time, Hougan wrote that bitcoin’s long-term volatility has declined compared with earlier market cycles, leading some professional investors to consider portfolio allocations around 5% rather than the earlier recommendations that were closer to 1%.
Risks and Market Conditions That Could Influence Projections
If the store-of-value market continues expanding at a similar pace, Matt Hougan estimated that the total market could grow to approximately $121 trillion within the next decade, a development that would significantly change the share of bitcoin needed to capture in order to reach the projected $1 million price level.
Under that scenario, bitcoin would only need to capture about 17% of the total market to reach a price level of $1 million per coin, significantly reducing the required market share compared with current conditions.
Hougan acknowledged that risks remain within the projection since the store-of-value market may not grow at the same pace observed during the past two decades, while bitcoin could also fail to gain additional market share within that expanding market.
However, he stated that the projections could prove conservative if rising concerns surrounding government debt levels and fiat currency debasement increase global demand for alternative store-of-value assets.
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