with Bitcoin (CRYPTO: BTC) breaching the $70,000 price level to set a new all-time high, crypto investors are naturally starting to wonder how much higher it can go. Cathie Wood of Ark Invest now predicts that Bitcoin could reach $1 million before 2030, so there is a very real possibility that some of these investors will one day become crypto millionaires.
But does Bitcoin have the potential to be a billionaire maker? In other words, by making a very modest investment in Bitcoin right now, is it possible to ever become a billionaire? Let’s take a closer look at what needs to happen.
Historical Bitcoin Returns
The starting point for looking at Bitcoin’s “billionaire making” potential is to analyze its historical returns. By almost any conceivable standard, these returns are impressive. Considering that Bitcoin first broke the $1 mark in February 2011, it is remarkable that Bitcoin is now trading around $70,000 just 13 years later.
The numbers are even more impressive when you compare them to the performance of other asset classes. Over the period from 2011 to 2021, Bitcoin was the single best performing asset class in the world. During that period, Bitcoin had an annualized return of 230% per year, compared to just 20% per year for high-growth technology stocks.
There is obviously a danger in extrapolating too much from these numbers. After all, past results are no guarantee of future results. That being said, Bitcoin returned 150% last year and is up another 70% this year. So while Bitcoin may no longer deliver the kinds of 230% annualized returns it did during its heyday, it still has the potential to deliver massive upside potential.
Future Bitcoin Price Predictions
With these historical returns as a starting point, it is possible to consider how much higher Bitcoin can go in the future. The one price prediction everyone is talking about is the one made by Cathy Wood of Ark Invest. In early 2022, she predicted that Bitcoin would reach a future price of $1 million by 2030. She increased that prediction to $1.48 million in 2023, and then to $2.3 million in 2024. .
And there are many investment managers and fund strategists offering even more aggressive price predictions about how much higher Bitcoin could go. According to Tom Lee, managing partner and head of research at Fundstrat Global Advisors, Bitcoin could hit $10 million in the next 25 years.
At the height of Bitcoin’s recent bull market, Jurien Timmer, Director of Global Macro for Fidelity Investments, predicted that Bitcoin would hit $1 billion by 2038. This is obviously a very controversial prediction, but it introduces a very tempting Opportunity: Invest just $72,000 today (the price of one bitcoin) and you could be a billionaire by 2038.
All the wealth in the world?
The only problem, of course, is that there are some very real limits to how much higher Bitcoin can go. For example, consider a number known as the Global Investable Asset Base. This describes the total amount of wealth that can be invested in the world. According to Ark Invest, that number is currently $250 trillion.
This number is significant because Ark Invest estimates that nearly 20% of the world’s global investment asset base could one day be invested in Bitcoin. According to Cathy Wood, this massive new influx of money could be the key factor sending Bitcoin to $2.3 million.
For the sake of our “making billionaires” thought experiment, let’s assume that this is the upper limit for the price of Bitcoin. It is hard to imagine that more than 20% of the world’s wealth is invested in bitcoins, and even this distribution may seem strange to some.
But at least it gives us a road map to get to $1 billion. If Bitcoin eventually reaches $2 million, then you would need to own 500 Bitcoins to become a billionaire. At today’s prices, that would mean an investment of about $35 million.
Will You Become A Bitcoin Billionaire?
While the chances of becoming a Bitcoin billionaire are unlikely (unless you happen to have $35 million hidden under your mattress at home), they are not impossible. According to the latter Crypto Wealth Reportthere were six bitcoin billionaires in the world at the end of 2023. Most likely these are investors who recognized the future potential of bitcoin when it was trading at just $1 and then held on for dear life when it hit a new all-time high after a new all-time record in the following decade.
If Bitcoin jumps from $70,000 to $1 million, it may still be possible to see more than a 10x return on your crypto investment. However, the days of 100x and 1000x returns may be over and that would limit your chances of becoming a crypto billionaire. That being said, I’m sure not many people would balk at the prospect of becoming a crypto millionaire instead.
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Dominic Basulto has positions in Bitcoin. The Motley Fool has positions and recommends Bitcoin. The Motley Fool has a disclosure policy.
Can bitcoin make you a billionaire? was originally published by The Motley Fool
