So a lot of people like to throw out wild numbers for bitcoin – $100k, 500k, 1 million!…even 0! Haha, people simply love wild numbers. But now, it’s time to put some math and brain cells into the calculation and actually do a valuation forecast for bitcoin using real valuation metrics and growth formulation.
Let’s get to brewing this valuation potion.
The first thing to look at is US equities, which has a market cap of around $55 TRILLION (https://siblisresearch.com/data/us-stock-market-value/). Next, is the US bond market, which is roughly $45 trillion (shorturl.at/evMVY). Next, cash holdings of personal and corporate accounts (shorturl.at/fuAR2). Estimations vary, but we can assume it is between $4-$5 Trillion. Finally, the market cap of the most liquid commodities held in the US (gold, silver, platinum, and collectibles) – roughly equates to about $10 trillion by fair estimates. With a combined total of roughly $115 Trillion.
Now let’s assume that people grow a brain and realize that to double their money in stocks (if they have a “diversified” portfolio of all equalities in a combined index), would take $55 trillion, a hilariously unfeasible number – and there’s a conservative outflow of15%. Then let’s assume people grow a bigger brain and realize that bonds are a joke, paying half of what inflation is, and the bond market asset outflow is 15%. Then cash by personal and businesses is moved to crypto (just a conservative amount of 15%) and people sell some of their commodity holdings to diversify (15% reduction).
This modest 15% outflow/reallocation would boost crypto by $17 Trillion. Considering that bitcoin is roughly 43% of the crypto, this would give bitcoin a market cap of over $8 trillion or a little over $400,000 per coin valuation.
Now, this is of course considering the ratio remains the same and there is no buy-up FOMO, which may drive prices even higher. Since unlike the dollar, which can be printed by Daddy J at the FED to a bazillion trillions by a single push of a button, bitcoin has a finite programmed limit of 21 Million.
Also, it’s important to consider that as other crypto projects gain prominence, the ratio of bitcoin’s dominance in crypto will reduce significantly, with projects like Ethereum, Polygon, and Cosmos gaining a larger chunk of crypto-asset allocation. This of course would be a very positive thing, as each project is significantly different and unique from bitcoin and a testament to the diversification that can be possible within the crypto-sphere.
Also, keep in mind, the valuations are very conservative. I used market caps of just “MURICA”. Crypto is global, and countries like Ecuador now have it as legal tender. Imagine a GLOBAL 15% asset inflow to crypto…imagine if it’s higher than just 15%…
I guess I’m supposed to say this or something (common sense):
NOTHING I say is financial advice. I am not qualified in anything. I just make videos n stuff when I’m slightly tipsy/bored about stuff I like. Do your own research frens.