You have surely heard about Bitcoin reaching a price of $1 million someday. It sounds like a huge number, but how realistic is it? According to popular analyst Willy Woo, who is well-known for his on-chain analyses, it might be closer than we think—though it still requires a massive influx of capital.
Back of the envelope calculation of how much capital needs to go into #Bitcoin in order for it to hit $1m per coin.
Answer: $5T or about 1% of global wealth assets.
So far only $620b has been invested. pic.twitter.com/CC0KEht6v7
— Willy Woo (@woonomic) August 25, 2024
The $5 Trillion Target
Woo suggests that Bitcoin needs about $5 trillion in new investment to hit that $1 million mark. Now, $5 trillion might sound overwhelming, but when you break it down, it’s just about 1% of all the wealth on Earth. Still, it’s important to remember that Bitcoin is relatively young compared to other assets. Over the first fifteen years of Bitcoin’s existence, around $620 billion was invested in it. That’s a lot, but nowhere near the amount needed to reach the $1 million target.
So, how does Woo arrive at this $5 trillion figure? He explains that for Bitcoin to reach a $1 million price, it would need a total market cap of $19.8 trillion. This figure comes from the current supply of around 19.8 million Bitcoins. But there’s more to it than just the market cap—Woo also talks about the multiplier effect. This multiplier is a way to measure how liquidity impacts the market cap. The deeper the liquidity, the lower the multiplier.
According to Woo, the historical trend shows a 3.5x multiplier for Bitcoin’s price movement. He explains, “Based on this historic liquidity trend, we can expect the next top to be a 3.5x multiplier. If we hit $1 million in the cycle after this, then the multiplier will be even less, given the trend in deeper liquidity making it harder to move price per dollar invested.” This means that to reach a $1 million price, Bitcoin would need $5.66 trillion in total investment. Since about $620 billion is already invested, we’re still $5 trillion short.
Can Bitcoin Really Reach $1 Million?
So, can Bitcoin really hit $1 million? It’s a big ask, and that money isn’t going to appear out of thin air. We’ll likely need several more bull runs to even get close—if it’s possible at all. Woo himself doesn’t think we’ll see $1 million this cycle, mainly because of the enormous amount of capital required.
It used to be everyone would be interested in how was it derived, but these days very few. This is a sign we are getting past the early adopter phase.
The calculation I used takes into account liquidity conditions and makes assumptions on when we hit the price. I picked sooner…
— Willy Woo (@woonomic) August 25, 2024
It is not the first time that Woo lays out possible scenarios for future price developments. He recently explained how a lower bound Bitcoin price of $700,000 would have to be realized as well as how a $24 million price would become a reality. The analyst is not alone in his million dollar predictions for Bitcoin. Michael Saylor, founder of MicroStrategy and known for his ‘21 Rules of Bitcoin‘, believes that Bitcoin could easily reach a value of $13 million per coin by 2045.
Right now, Bitcoin is facing some tough times, with its price hovering around $59,600 after a recent 6% drop. It’s clear that the road to $1 million is anything but straightforward, but it’s a journey worth keeping an eye on.
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