£1 Million Bitcoin — 10 Reasons Why It's On The Cards

In this blog, I will outline 10 reasons why a £1 million Bitcoin is a more realistic possibility than many would care to admit. The significance of a million feels as though it is gradually diminishing over time, even though the digits remain unchanged!

The Grandeur of a Million

Until recently, the million-pound figure had always seemed elusive and grand. A quantity of a million in most contexts is considered substantial. Therefore, the connotation of a million in terms of worth has been one of power and wealth.

This was certainly true a century or two ago. Take John Jacob Astor IV, for example. He was the wealthiest passenger on the ill-fated Titanic, with a net worth of $87 million. While that amount is substantial even by today's standards, it would be equivalent to $2.6 billion today—a significant difference.

Moreover, just a few decades ago, the new game show "Who Wants To Be A Millionaire?" captured large audiences by offering a staggering prize of £1 million to the individual who could answer all the questions correctly. It was considered a life-changing sum, which is why it attracted so many viewers. But would £1 million today generate the same excitement? Is it still a life-changing amount?

This is not a throwaway comment meant to sound hyperbolic or out of touch. £1 million is still a considerable sum and would change most people's lives in one way or another. However, it wouldn't be unreasonable to say that £1 million today would not drastically change a family's wealth for generations to come. For instance, back in the late 1990s when the British TV show debuted, becoming a millionaire meant buying a large house outright and ensuring a comfortable retirement, complete with holidays. Sounds like the dream, right? And so it should, after all, you've become a millionaire!

But if you were to become a millionaire today, would you be able to enjoy the same lifestyle? Of course, all things are relative, and various costs, such as housing and retirement, would depend on location, spending habits, etc. With all factors constant, you would not be able to afford that same large house, and you certainly wouldn't be able to retire comfortably, especially if you are under 50.

The combination of monetary debasement, inflation, and increased debt all contribute to rising costs. Hard assets such as real estate appreciate over time, our shopping bills rise each year even when we purchase the same items, and our wages only see minor increases. The net effect is a gradual erosion of our purchasing power, a trend affecting everyone, whether a millionaire or someone struggling to make ends meet. However, the difference is that wealthier individuals can move their excess funds into hard assets that mitigate the effects of fiat money debasement.

What began as a minor issue is gaining momentum, much like a snowball rolling downhill. Just a couple of decades later, the million-pound prize has shifted from ensuring retirement to merely supplementing work. What will the situation be like in another 20 years? It seems we're not far from a time when the connotation of being a millionaire will only apply to multi-millionaires or perhaps even billionaires.

It's for these reasons, among others, that I believe Bitcoin is on its way to a £1 million price target. Many people find it inconceivable, others see it as a possibility. I consider it almost a certainty. The following 10 reasons will explain why:

1. Limited Supply and Increased Demand

Economics, extending to businesses and politics, can be simpler than often portrayed. The economics of Bitcoin are incredibly straightforward.

There is a constant push and pull between the demand for something and its supply. For instance, food is essential for human survival, ensuring a perpetual demand. However, in the absence of supply, no one can eat, leading to inevitable death. This is not a viable scenario, prompting solutions like planting more crops and breeding more farm animals to boost the supply.

While this approach benefits food supply, it is not ideal for currency. If the supply continually inflates to meet demand, prices can spiral out of control. This is evident in countries like Argentina and Venezuela, which suffer from triple-digit inflation. To counteract increased demand, the supply is expanded, but this is only a temporary fix leading to rising prices and wages.

This scenario is why wealthy individuals prefer investing their surplus funds in assets rather than leaving them in bank accounts. If their money is kept in a system where the supply is continually increasing, the value of their savings diminishes. Conversely, placing funds in hard assets, where increasing supply is more challenging, like real estate and gold, usually results in value appreciation over time as demand outstrips supply. Enter Bitcoin.

Bitcoin is unique with its capped supply of 21 million coins, a feature not shared by gold or real estate. Gold is continuously mined, and the limits to discovering more gold are gradually diminishing as technology advances. Additionally, new housing developments are omnipresent. If horizontal expansion is not an option, vertical construction ensues, envisioning a future with buildings a million stories high. Imagine the penthouse views...

Bitcoin's absolute scarcity sets it apart. It is programmable money with an embedded issuance schedule in its code. One reason for Bitcoin's price surge from £0 to £40,000—and, in my view, soon to £1 million—is the increased demand from both retail and institutional investors, while the supply remains unchanged, necessitating a price increase.

This principle is no different from why gold and real estate prices have soared over the last five decades. The demand is ever-increasing as our money is debased over time, and the supply of hard assets is minimal compared to the money in our bank accounts.

As awareness of Bitcoin and its principles as hard money grows, demand is only likely to increase. Should millionaires and billionaires decide to allocate a small portion of their wealth to Bitcoin, they will be limited to what is available on exchanges. With Bitcoin's remaining supply projected to take over 100 years to mine, unlike gold, increased demand cannot create more supply.

Even modest allocations from asset managers, family offices, and wealthy individuals could cause Bitcoin's market capitalisation to skyrocket, easily surpassing the £1 million mark.

2. Hard Assets Becoming More Favourable

It has already been noted that hard assets are increasingly becoming the preferred choice as people realise the limitations of keeping their savings in a currency that can be endlessly printed.

Governments have the capability to issue billions of pounds with just a few clicks. This realisation demystifies the numbers seen on banking apps, revealing them as mere digits rather than representations of physical wealth stored in a personal vault.

Amid rising inflation and concerns over monetary policy, there's a growing interest in hard assets that can maintain value under such conditions. Since its inception, Bitcoin has emerged as the top-performing asset among these, demonstrating remarkable resilience.

Bitcoin has successfully navigated hack attempts, internal disputes over its protocol, and significant fear, uncertainty, and doubt (FUD) from governments, institutions, and central banks. Despite these challenges, it has remained robust against all adversities.

With a strong network and principles of sound money similar to gold, yet enhanced by digital benefits, Bitcoin stands out as a unique hard asset. It boasts a known fixed supply and a predefined issuance schedule, contrasting sharply with traditional fiat currencies and offering a genuine alternative.

As the value of fiat currencies continues to decline, Bitcoin's price is poised to rise. The saying "1 Bitcoin equals 1 Bitcoin" emphasises its stable value proposition. Viewing Bitcoin as worth £40,000 is to compare it against the British pound, which is devaluing over time. While many consider Bitcoin volatile, it is actually the pound that exhibits volatility. Bitcoin's stability is inherent in its fixed supply of 21 million coins. Therefore, in my view, Bitcoin's value in pounds is likely to continue its upward trajectory, albeit with volatility.

3. Inflation Hedge/Store Of Value

Among many Bitcoin sceptics, the argument that Bitcoin serves as an inflation hedge is often dismissed as one of the least convincing justifications for supporting the cryptocurrency. Why? Because Bitcoin is perceived as a highly volatile asset.

Cherry-picking data is a common practice, as it supports our viewpoints. Sceptics argue against Bitcoin being an inflation hedge and, therefore, a store of value, pointing to its daily price fluctuations, which can see a rise of 5% and then a downward swing by the same percentage. Additionally, Bitcoin typically experiences a bear market year within its well-known four-year cycle, leading sceptics to assert that Bitcoin cannot be a store of value if its price drops by 80% during such periods.

This argument seems reasonable, as an 80% drop does not seem like a viable countermeasure to a 1-10% inflation rate. However, this viewpoint selectively ignores the fact that, during the other three years of the four-year cycle, Bitcoin often provides substantial returns exceeding 50%. Bitcoin's bull runs have seen increases of several hundred percent, making the case for Bitcoin as an inflation hedge and store of value more compelling over a four-year or even a ten-year timeline.

The key point is that in an era of unprecedented central bank monetary expansion, we have an asset whose supply cannot be altered, with no central issuer or governmental control, a predetermined and decreasing issuance rate, and absolute scarcity. These attributes make Bitcoin an ideal asset during inflationary times.

Consider Bitcoin's performance against the world's major currencies over the last five years:

Japan: +1,861%

China: +1,416%

Euro: +1,414%

Britain: +1,374%

Canada: +1,365%

US: +1,336%

These staggering returns strongly support the view that Bitcoin has been an effective inflation hedge amidst significant geopolitical uncertainty over the past five years.

The gradual effects of high inflation and monetary debasement often go unnoticed, especially in the Western world, where the impact is more subtle. For example, the US dollar, as the world's reserve currency handling the majority of global transactions, appears to perform well compared to inflation-stricken countries.

Global currencies against the US Dollar over the last ten years:

Venezuela: -99.9%

Argentina: -98.3%

Turkey: -92.6%

Russia: -66.7%

Brazil: -55.4%

At first glance, it seems the US dollar is faring well. However, it is merely the "slowest melting ice cube" among them, a perspective that becomes clear when comparing its performance to Bitcoin's +21,369%.

Bitcoin is setting new all-time highs against every fiat currency, a trend that will likely continue as long as fiat systems are sustained by debt—a scenario that seems inevitable unless global economies are prepared to face the most significant meltdown in centuries. I believe such an outcome is unlikely, which supports the notion that Bitcoin will reach £1 million sooner rather than later.

4. Institutional Adoption and Legitimisation as an Asset Class

"Everybody gets Bitcoin at the price they deserve" is a saying that resonates within the Bitcoin community. Far from disparaging newcomers, it acknowledges the adoption cycle that new assets typically undergo, a cycle not exclusive to Bitcoin.

In the lifecycle of emerging assets, there are early adopters followed by mainstream acceptance, and finally, the laggards who join last. Sometimes, arriving slightly late aligns better with some individuals' and especially institutions' risk tolerance. It has taken about 15 years from its inception for Bitcoin to be recognised as a legitimate asset by institutions.

The compelling returns Bitcoin has offered can only be ignored for so long before taking action becomes necessary. After a decade of advocacy, the SEC approved Spot Bitcoin ETFs in the USA, opening the floodgates for trillions of dollars under asset managers' control to flow into Bitcoin.

The endorsement of Bitcoin by major players like BlackRock, who are now purchasing it aggressively, is significant. But even more impactful is the psychological shift and the complete reversal in perception this represents. Just a few years ago, Larry Fink labelled Bitcoin an index for money laundering on television. Now, he refers to it as a "flight to quality." This change is monumental.

Such a shift in mindset could prompt multi-millionaires or billionaires to consider a 1-5% allocation to Bitcoin. Given Bitcoin's fixed supply, its issuance schedule, and a 70% HODL rate, it only takes a few of these allocations to significantly impact Bitcoin's price.

BlackRock alone manages $10 trillion in assets, and with now 10 ETFs on the market, Bitcoin is undoubtedly becoming a mainstream investment asset. This will lead its price to new highs as long as demand continues to rise. If the price keeps increasing, BlackRock will be motivated to purchase more Bitcoin, as this will increase their fees. This scenario does not even account for nation-state adoption and other capital inflows into the Bitcoin market cap. A £1 million Bitcoin is more plausible than it might initially seem.

5. Technological Advancements and Network Effects

It's reasonable to assert that Bitcoin's true strength lies in its network. A common critique from Bitcoin sceptics is the perceived lack of practical use, questioning, "Does anyone actually use Bitcoin to buy a cup of coffee at the store these days?" There are two responses to this. Firstly, many people do, in fact, have the option to make purchases with Bitcoin, particularly those without bank accounts in less affluent countries. Secondly, choosing to hold Bitcoin and not spend it is still utilising the network. Every day you keep your Bitcoin in cold storage, you're reinforcing Bitcoin's network effects.

Metcalfe's Law, which relates to the value of network effects, suggests that the more people who use the network, the more valuable it becomes. This concept is a source of frustration for critics who argue that Bitcoin lacks practical applications, yet they overlook its value as a permissionless, censorship-resistant savings mechanism for the long term.

The Bitcoin network has evolved from its inception by Satoshi Nakamoto to a global network with countless node operators and millions of active wallets, contradicting the notion of it being valueless.

Over time, Bitcoin developers continue to enhance the system beyond its base layer. Layer 2 solutions like the Lightning Network are making transactions faster, easier, and more cost-effective than traditional systems like VISA or Mastercard. Whether individuals choose to spend their Bitcoin or not remains their prerogative. What matters is that the infrastructure is established so that when Bitcoin transitions from solely a store of value to also a medium of exchange, the requisite technology will be ready to support this shift. This evolution will likely boost adoption and could eventually lead to people earning in Bitcoin instead of purchasing it. At such a stage, the value of Bitcoin could well exceed £1 million.

6. Global Economic Instability

In times of uncertainty and fear, capital tends to flow towards safety. Bitcoin has been considered a risk-on asset for some time, which is understandable given its nascent stage and relatively small market size, limiting its capacity to serve as a global financial safe haven.

Yet, the past five years have been tumultuous, featuring a global pandemic, the conflict between Ukraine and Russia, unrest in Syria and Yemen, and the Israel-Palestine conflict. On top of these geopolitical tensions, the world has experienced significant inflation, and several banks have shown signs of instability. Notably, Bitcoin's price surged when Silicon Valley Bank collapsed in early 2023.

Despite rising interest rates, which initially drove a flight to the safety of the dollar, Bitcoin has persevered, rallying amid bank failures in a manner similar to gold's reaction to imminent financial recoveries.

Bitcoin's appeal lies in its global accessibility and decentralised nature. A common scepticism revolves around the potential downfall of the internet, a scenario that would pose far greater global challenges beyond the cryptocurrency space. However, such an event is highly improbable and, even then, unlikely to eradicate Bitcoin.

Bitcoin's resilience, or its anti-fragile nature, strengthens my conviction in its price growth amidst escalating geopolitical tensions. Bitcoin is increasingly recognised as a genuine safe haven, as highlighted by Larry Fink and affirmed by staunch Bitcoin supporters.

7. Speculative Interest and FOMO

Many people hesitate to label Bitcoin as speculative, even though it is precisely that. There's nothing inherently wrong with being speculative, especially considering Bitcoin has only been around for 15 years and still requires time to cement its position globally. However, this doesn't mean that some individuals haven't already grasped its unique value.

In today's digital age, with the internet and media keeping us updated to the millisecond on global events, we have the capability to anticipate market movements, conduct our research, and make informed decisions. These capabilities, coupled with the desire to seek investment alternatives to holding depreciating currencies in savings, naturally lead to speculation and FOMO (Fear Of Missing Out).

The media plays a significant role in this dynamic, often discussing Bitcoin regardless of whether the news is positive or negative. Often, they may not fully understand the concepts they discuss, such as the Bitcoin halving, yet their coverage undeniably fuels demand in cryptocurrencies, including Bitcoin.

Each bull market cycle features moments of intense FOMO and speculative price discovery, leading to sharp price increases and drawing more investors into the market before the anticipated correction. Despite predictions of Bitcoin's demise after these cycles, it has consistently stabilised and reached new all-time highs. The trend of speculation and FOMO is expected to grow stronger. As Bitcoin reaches milestones like £100,000 and £250,000, it will provoke a profound fear of missing out. Once individuals invest, their reluctance to exit may increase. After all, who would willingly choose to bet against Bitcoin's continued rise?

8. Regulatory Clarity

Regulation has often been a point of contention within discussions on Bitcoin and the broader cryptocurrency industry. Common apprehensions include fears of Bitcoin being banned or excessively regulated. While regulation is indeed a crucial aspect to consider, there are concerns that stringent controls could disrupt the channels for entering and exiting the market, potentially stymying adoption.

Speculation about a modern-day equivalent of the 1933 Executive Order 6102 in the US, which could mandate the declaration of Bitcoin holdings, circulates within the community. The comparison to gold’s historical regulatory challenges suggests a complex scenario; however, enforcing such regulations is fraught with difficulties. Americans, who pride themselves on freedom and democracy, would likely view such measures as unconstitutional.

Despite recurring bans in countries like China, Bitcoin has consistently demonstrated resilience against regulatory pushback. As an open network, Bitcoin's utility extends even to those who oppose it. If China rejects Bitcoin in favour of its digital yuan, the US would be at a disadvantage to follow suit with a ban. Moreover, a ban would likely only affect the on-and-off ramps to Bitcoin, while the cryptocurrency could continue to thrive in nations that embrace business and innovation. El Salvador is a notable example of leveraging regulatory restrictions to its advantage, with significant economic benefits observed.

The allure of Bitcoin and its propensity for value appreciation make favourable regulations increasingly appealing. Why impose a ban when there could be substantial benefits from embracing it? This introduces a game theory dynamic, with several countries already easing crypto regulations and tax laws, thereby attracting Bitcoin enthusiasts and investors. These nations stand to gain from increased investment and the influx of wealthy Bitcoiners seeking regulatory-friendly environments.

The evolving landscape suggests a shift in perspective, where outright bans serve only to exclude oneself from the potential benefits. Analogous to banning televisions, iPhones, or laughter, such measures appear increasingly impractical. Over time, while some jurisdictions may continue to resist, others will welcome Bitcoin supporters with open arms. This dichotomy is expected to reflect positively on Bitcoin’s value, mirroring the migration of its proponents to more welcoming regions

9. Multiplier Effect

The multiplier effect is not a new phenomenon, yet it seems to have remained somewhat underappreciated in discussions about asset prices, particularly in the context of Bitcoin, its liquidity, and supply constraints. Given Bitcoin's high liquidity and the stringent control over its supply issuance, which is capped at a fixed amount, its price is susceptible to significant movements in both upward and downward directions.

Bitcoin's notable volatility can often be attributed to this multiplier effect. A study by Bank of America highlighted their prediction for Bitcoin's bull market multiplier, which at its peak exceeded 100 to 1. They estimated that an injection of approximately $93 million in cash into the Bitcoin market could increase its price by 1%. This relatively modest sum underscores the potential for significant price movements.

This theory was supported when the announcement of a non-existent ETF in October caused Bitcoin's price to surge by thousands within minutes. If not for the multiplier effect, such a price jump would have necessitated a capital injection of billions. Instead, it suggested that around $1 billion had been injected, affirming the concept of a high multiplier effect.

This dynamic illustrates how investment flows can disproportionately affect prices due to the market's liquidity traits. Additionally, the asset's price is determined at the margin, meaning a one-pound investment in Bitcoin does not equate to a one-pound increase in market cap, presenting a fascinating dynamic for future Bitcoin price movements.

The impact of ETF money entering the Bitcoin market is beginning to manifest, with expectations for further growth. BlackRock has announced plans to purchase up to $300 billion worth of Bitcoin over the next three years for assets under management. Such inflows could propel Bitcoin's price well beyond £100,000, based on merely small percentage allocations. Much of the recent upward price movement can be attributed to the multiplier effect, with relatively minor inflows into ETFs prompting significant rallies.

The convergence of a fixed supply and issuance schedule, a high HODL rate, substantial demand pressure, and an impending Bitcoin halving, which will halve block subsidy rewards, sets the stage for bullish market behaviour. However, it's crucial to acknowledge that the multiplier effect works in both directions, and thus, if inflows were to reverse, significant price drops could ensue. It's important to remember that this is not financial advice, and conducting your research is always recommended.

10. Comparative Growth Trajectories

How far-fetched is the idea of a £1 million Bitcoin? By comparing Bitcoin's growth trajectory with that of Amazon, we can glean some insights. Bitcoin is often likened to Amazon in terms of its volatility and the disruptive nature of its adoption. Before becoming one of the success stories to emerge from the internet stock bubble of 2000, Amazon was characterised by significant volatility, major corrections, and steep declines. Initially dismissed as merely a "book company," it was frequently pronounced dead. Does this narrative sound familiar?

Fast forward to today, and Amazon boasts a valuation of $1.7 trillion, achieved over 25 years. This journey into becoming an integral part of daily life for many is nothing short of remarkable. Compared to Bitcoin, which currently has a market cap of $1 trillion but with 10 fewer years under its belt, Amazon's growth is impressive. Amazon experienced its explosive gains as adoption increased and it became a staple in the financial world. The next decade for Bitcoin remains to be seen.

Looking back 10 years, Amazon's market cap stood at $144 billion, meaning it has experienced a 10-fold increase in value since then. This precedent aligns well with the potential trajectory for Bitcoin in the coming decade. By 2034, Bitcoin could reach a $10 trillion market cap if it mirrors Amazon's growth, translating to approximately £400,000 per Bitcoin.

While this projection falls £600,000 short of the ambitious £1 million Bitcoin target, it's important to consider this as just a baseline scenario. This baseline follows Amazon's growth trajectory, but I anticipate Bitcoin could outperform this, given its global impact and potential to address numerous financial sector challenges.

In a more bullish scenario, if Bitcoin proves to be 10 times more disruptive than Amazon, it could achieve a market cap of $100 trillion, equating to a Bitcoin price of £4 million. This far exceeds the initial £1 million target, and for good reason, reflecting Bitcoin's transformative potential on a global scale.

Conclusion: A Road to £1 Million

There we have it: 10 compelling reasons why a £1 million Bitcoin is a plausible future outcome. It's crucial to recognise that opinions and projections abound, and all speculations remain just that until they are either validated or refuted.

I am confident that the reasons outlined provide a solid foundation for believing in Bitcoin's potential to reach a seven-figure valuation eventually. It's important to note that I haven't specified a timeline for this milestone; the future remains uncertain, and predictions are based on the best judgment and information currently available.

From my perspective, the current valuation of Bitcoin at £0.04 million signals a significant buying opportunity. The asset's unique characteristics—lack of centralised control, a fixed supply immune to debasement, non-discriminatory access, and resistance to censorship—solidify its long-term value proposition. In my view, these attributes alone justify a valuation well in excess of £1 million.

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