- Broken records
- Bigger than gold
- Bitcoin at $1 million
I’m going to ask a favour right now. A thought experiment if you will…
I want you to imagine a world without financial rules and controls, at least not in the sense that you know today.
Imagine a world without the centralised authority of central banks, commercial banks, regulators and the world’s gigantic money controllers.
A world where financial access and existence if truly free. Not necessarily in the monetary sense, but in terms of control.
A world where no one can tell you what to spend, where to spend it, how to save, how much you can or can’t save or where you can or can’t save it.
Would anarchy and chaos ensue? Probably not.
In fact, I dare say that if we let go of the systemic controls of the global financial system as we know it, we’d flourish and thrive on a level never before seen. Of course it wouldn’t be a great outcome for banks, central banks, for governments – most of their revenue (aka, you) would dry up instantly.
In this thought experiment, what if money was not ruled by an unelected handful of human decision makers, but instead by code? By an immutable, unchangeable asset that at its very core was about freedom?
Yes, I am talking about bitcoin.
But you knew that already. And I have no doubt that people will read this and roll their eyes. I’ve had similar responses to this idea for the last decade and counting.
Systemic change on that scale is not something that happens quickly. It is over generations, that real change takes place. But that change is taking place. It’s taking place right now, right in front of everyone’s eyes.
And it will change our future. That’s not a premonition, that’s a proclamation. The way in which bitcoin and crypto is already changing global finance is set to reshape the very fabric of our financial future.
Which also means right now, you’ve got a window of opportunity to actually do something about it, take action and use this opportunity to your advantage while you still can.
Here’s how the record plays
I know you’re out there. I can feel you now. I know that you’re afraid… you’re afraid of us. You’re afraid of change. I don’t know the future. I didn’t come here to tell you how this is going to end. I came here to tell you how it’s going to begin. I’m going to hang up this phone, and then I’m going to show these people what you don’t want them to see. I’m going to show them a world without you. A world without rules and controls, without borders or boundaries. A world where anything is possible. Where we go from there is a choice I leave to you.
That quote is from end of the movie The Matrix. It’s a conversation Neo (the protagonist) has with the robots that control the matrix.
It’s become somewhat of a cultural war cry within bitcoin for many years. That’s because the words resonate within the bitcoin community as to what bitcoin delivers.
And the choice left is simply whether or not the “system” chooses to continue to fight against the uprising or accept it and learn to live with it.
Interestingly while we are seeing ongoing pushback from regulators, governments and central banks, we’re actually seeing moves more traditional finance into the acceptance of what bitcoin and crypto can become.
It’s these moves that have enhanced our view that in the near future one bitcoin could be worth as much as US$1 million.
And it’s the next big price trigger that’s coming in about 15 days that we think is going to set that path to $1 million in motion.
What many people still don’t understand is that in about 15 days on 19 April bitcoin’s block reward will halve again. This “halvening” has already happened three times before in 2012, 2016 and 2020.
When bitcoin originally started the block reward was 50 BTC – the good old days when anyone could mine it so long as they had some relatively decent GPU hardware in their PC and a bit of knowledge about running a command line script.
That 50 BTC reward halved in 2012 to 25 BTC. And then again from 25 BTC to 12.5 BTC in 2016. And in 2020, it halved again to 6.25. At the next halving in 15 days’ time, it will halve again to a block reward of just 3.125 BTC.
What we’ve seen in the past three halvenings is a gradual run-up in BTC price to the date of the halvening. It’s then followed by a parabolic shift higher in the year to year-and-a-half after the halvening.
The gradual run-up in value starts about a year prior to the halvening as well.
Of course, past performance is never a guarantee of future performance. And there’s really no certainty that the same pattern will repeat again. But in my view, it will.
I believe we’re in the midst of seeing the almost exact same pattern that we saw leading into 2012 and then again into 2016 and then into 2020.
The record plays like this: a significant crunch in value, followed by a steady rise back in value towards the halvening date. This is followed by continuous volatility but movement higher and then a parabolic rise to a peak, followed by another significant crunch in value – albeit after each crunch, the low is higher than the previous highs.
But then even if this plays out as we expect, how on earth do we get to a potential value of US$1 million?
Gold, scarcity and Fink
Well, it’s quite simple.
Many believe that bitcoin is the world’s digital gold. That the features of bitcoin liken it to the store of wealth that many people also hold true with physical gold. And it certainly displays those features (amongst others).
In 2019, CEO of Twitter (at the time) and Square (now called Block Inc) Jack Dorsey made a comment that bitcoin could become the “native currency” of the internet.
I’ve long held the belief that bitcoin’s future is such that corporations, nation states and ultimately all people on earth will hold it and use it to function in a global economy with a bitcoin standard.
But even if we just eye up the potential for bitcoin to be worth more than the gold market, we’re looking at bitcoin rising to a market capitalisation of $15.4 trillion.
Currently at $1.3 trillion, that would mean an 11.85-times rise in bitcoin’s value. That would see one whole bitcoin worth around $776,175.
Now it should be said that figure is based on the total supply of bitcoin, 21 million BTC.
Now remember bitcoin has a “hard cap” of just under 21 million whole bitcoin. That’s as many as there will ever be in existence. That cannot change, ever.
But the reality is actually a little different. While there may be 21 million that will only ever be mined (estimated around the year 2140), liquid bitcoin in circulation will be millions less.
We know there are millions of bitcoin tied up in wallets and accounts where people have lost the private keys, forgotten passwords, or just simply died and not told anyone how to access their holdings. These “forgotten bitcoin” will never join total circulation.
And the bitcoin community estimates that there could be as many as three or four (or more) million bitcoin that will end up being lost or dormant forever. In all likelihood the circulating supply of bitcoin in the future will be more like 17 million.
Furthermore, as the world starts to get a greater understanding of bitcoin and its store of value potential, they will also start to fully appreciate its scarcity. They will fast realise that owning a whole bitcoin will put you in a unique group of people.
More than likely when people talk about bitcoin in the future, it will be in “Satoshi” the smallest divisible unit of bitcoin. And those with entire bitcoin, “wholecoiners”, will be few and far between.
Now if all the available bitcoin ends up being worth as much as the gold market, then we’re looking at $15.4 trillion and 17 million bitcoin, which works out at US$905,882 per bitcoin.
We’re close… but not quite there.
And while I can feel the eyes rolling at this very idea, I recall the same feeling and same blowback in 2013 when one bitcoin first became worth more than one ounce of gold, and the subsequent years when bitcoin was accused of being a Ponzi scheme.
So, what does it take to get it to a million?
Well, it’s simple: demand and the ongoing shortage of supply.
In 2024 we’ve seen the launch of bitcoin spot exchange-traded funds (ETFs) in the US that have become the fastest growing and most successful ETF launches in history. They are hoarding bitcoin (a requirement of operating a physically backed ETF) faster than miners can mine it and that bitcoin in the market can supply it.
That demand looks like continuing on for a long time, right in the midst of another of the bitcoin halvenings that will slash the new supply of bitcoin into the market by half.
Add to the mix, we’re seeing unknown buyers of billions of dollars’ worth of bitcoin in the market that some suspect are nation states, or very wealthy individuals building a war chest to protect against ongoing geopolitical risk and central bank mismanagement.
And then you’ve got Larry Fink, the CEO of BlackRock, the world’s largest asset manager with over $9 trillion of assets under management, who is on record talking about how all financial markets will be “tokenised” and that the future of all assets is undergoing a revolution.
Stock markets, bond markets, lending, borrowing, capital markets, the whole system is set for a shakeup. There are wider aspects of the crypto ecosystem that will perform some of these functions, but bitcoin will be at the heart of it.
These are not assumptions; this is the most powerful man in global finance saying this is the direction things are heading.
For me, that easily takes bitcoin to $1 million, the wider crypto market into a gigantic bull run, and then a whole rollcall of crypto-related stocks on the stock market to new all-time highs.
The good news is that bitcoin is just one way to play this opportunity. It’s a good one, but through the stock market I believe we’ll see a way for investors to potentially mint wealth in the stock market like never before. And it could come fast and furiously if the cycle plays out as expected leading into and after the next halvening in just 15 days’ time.
So, switch on, listen up and stay tuned for what I’ve got to say at the weekend and on Monday, as it might be one of the biggest decisions you’re going to make in 2024.
Regards,
Sam Volkering
Contributing Editor, Fortune & Freedom
