The Case for BITCOIN $1,000,000

For the holiday season, we are republishing some of our most popular pieces of the year.

One of our best calls of the year was that Bitcoin would hit $100,000.

When it burst through that level earlier this month, we republished that note and raised our long-term price target to…$1,000,000.

Here is that note…

We haven’t always been big supporters of Bitcoin.

We first learned about it back in 2013 (through one of our hedge fund colleagues), we thought it was an interesting curiosity.

We didn’t dismiss it, though, because we know the price of a security doesn’t have to match the value of the underlying asset. We see this in stocks all the time.

So - what if the security has NO underlying asset? We didn’t think it would matter.

As long as enough people BELIEVE it would have value, then it would have value. We have seen this with collectibles, art, precious metals and (perhaps the craziest example) currencies.

Back then, though, we could never conceive that ENOUGH people would ascribe value to Bitcoin to give it a $2 trillion value. Or eventually be as big or BIGGER than gold.

That conception dawned on us about a year ago.

Earlier this year we ran an entire series on why we thought Bitcoin was going to reach $100,000 by year-end.

That happened…today.

Even though we JUST republished that series a month ago - in honor of Bitcoin $100,000 - we are going to republish Part One of that series.

It is the simplest overview of our view that Bitcoin is likely to go higher. Much higher.

We know many of you still may not agree. We understand that.

We encourage you, however, to read the piece and consider the possibility.

Take a small percentage of your portfolio and allocate it to Bitcoin. How ever much you are comfortable with having allocated. We don’t think you will regret it.

One last thing - we are amending our Bitcoin price “target.”

Guess what it be worth if it had the same market capitalization of gold?

BITCOIN $1,000,000.

IT. IS. COMING.

It is sometimes useful to take a step back and think of all the incredible technological advancements that have happened throughout our lifetimes.

I was born five decades ago and 90%+ of the technology that I interact with every day didn’t exist only a few decades ago. Not to mention my engagement with that technology is a hundredfold what it was for my parents.

Now – whether that is a good or bad thing –it certainly is where we are in the world today.

As much as it feels very “normal” at this point, one of the biggest developments in technology in the last few decades has been “blockchain technology”. Specifically, the “cryptocurrency” bitcoin.

This is a moment where we want you to take a step back…

While bitcoin seems like the most ordinary thing in the world today, imagine if two decades ago I told you that an anonymous Japanese software developer (Satoshi Nakamoto) was creating a massive mathematical algorithm for a new digital (and safe) currency.

Sounds like something out of the “Matrix” movies.

Yet here we are in 2024 with this sci-fi idea having almost a $1.3 trillion market capitalization and trading over $18 billion a day. This idea is one of “The Magnificent Seven”!

It is easy for many older people to dismiss Bitcoin as digital “fool's gold”. It is some made up software algorithm with no inherent value, no cash flows and no history.

We don’t disagree!

That being said – what is “gold gold”? It is a rare metal with minimal industrial use that millions of people have decided to ascribe a value to for thousands of years.

This gets to our point about bitcoin.

GOLD is “gold” because humans have decided to ascribe the value to it. There was a real question about whether bitcoin would ever achieve that same status and we think it has.

One of the most fascinating aspects of bitcoin is to think about the future of ownership.

Look it up and you will see that there are currently just over 46 million bitcoin “wallets” that hold at least $1 in bitcoin. In the history of bitcoin there have been about 460 million wallets created.

Let’s put that into perspective of the almost EIGHT billion people on planet Earth…

This means only 0.5% of the planet’s population owns bitcoin today. We don’t know where that number is going in the future but we are pretty confident it is going higher.

The current market capitalization of gold is over $14 trillion, or more than ten times the market cap of bitcoin.

We think gold is great - and probably a buy right here – but it is not very useful. When is the last time you used gold to buy groceries or a car? Maybe it can be done but it is quite complicated.

While you can’t directly buy groceries with bitcoin, it is a lot easier of a process than gold.

Let’s go back to the ownership numbers we discussed before.. it is difficult to get real data but most sources think about 10% of Americans own gold in some form. That is around 33 million people or two-thirds the number of people who own bitcoin in the world.

Again – there are EIGHT billion people on the planet! If just 1% decided to own bitcoin, that would be a +50% growth to the demand…with basically no growth in supply.

Currently, almost 94% of the bitcoin that will ever be created has already been created. Take a bitcoin price of just about $65,000 and add +50% growth in demand with no real supply growth and know what price target you get?

$100,000!

We aren’t saying you should only own bitcoin or even that it should be the majority of your holdings, what we ARE saying is we think it has a ton of potential.