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During a Tuesday broadcast interview with Bloomberg Technology, the Founder and CEO of Galaxy Digital -- Mike Novogratz -- stated that an individual Bitcoin (BTC) will be worth $500,000 in five years' time.
Novogratz is a strong believer in cryptocurrencies. In fact I wrote last week how Galaxy Digital has partnered with Goldman Sachs to offer access to an Ethereum investment fund for Goldman clients willing to invest a $250,000 minimum. Goldman and Galaxy had been offering a similar Bitcoin investment fund as well.
While his support of Bitcoin is not a shock to anyone, his price prediction and time horizon are bold given Bitcoin's current market capitalization.
Bitcoin's price and market capitalization would have to increase 12 times
Bitcoin is the largest coin by market cap, which is more than $768 billion as of this writing, according to CoinMarketCap. Last year Bitcoin had a respectable price run up of 60%, but it's currently trading at just over a 40% decline from its all-time high of nearly $69,000 on Nov. 8, 2021.
To hit $500,000 the current price of Bitcoin would have to increase more than 12 times its current value -- pushing Bitcoin's market cap to a mind boggling $9.2 trillion in just five years. By comparison, that's similar to speculating that Google, Apple, or Amazon would see their respective corporate valuations increase 10 fold by 2027 -- I haven't heard any analysts predict that.
But "smart money" investors such as Novogratz say it's possible with crypto, because adoption of digital currencies is happening at a faster clip than any technology in history.
Crypto technology adoption is the fastest in human history of tech
While Novogratz gave several reasons he believes in his half million-dollar price point for Bitcoin, the most compelling is the rapid adoption of cryptocurrencies by the masses.
Novogratz said that until the launch of Bitcoin, the fastest adoption of technology had been the internet, which started in 1994 once government agencies globally gave virtually anyone access to the worldwide web. The resultant internet boom produced some of the world's largest companies such as Google, Amazon, and Facebook.
It's been widely reported that in 2021 Bitcoin had about the same number of users as the internet did in 1997. At that time, it took 7.5 years for the internet to reach 1 billion users. Bitcoin's growth projections of more than 80% will get it to a billion users by 2025 -- that would be 3.5 years sooner than the internet. Novogratz said that this accelerated adoption trajectory is the basis for his prediction.
"Five years out, if Bitcoin is not at $500,000 -- I'm wrong on the adoption cycle. We're seeing an adoption cycle that accelerates. Bitcoin grew so much faster last year than the internet did during its best years in the 1990s. And so, I see this [Bitcoin] going viral everywhere," Novogratz said during the broadcast briefing.
Could Bitcoin hit $500,000 in 5 years?
While no one can predict the future with 100% certainty, we do know that during the past 10 years Bitcoin has outperformed every other asset class, providing annualized returns of more than 230%.
Given the strong deflationary nature of Bitcoin, its capped supply of only 21 million coins, its proven ability as a store of value, its accelerating adoption rate, and underlying fundamentals, it's not difficult to predict higher highs in store for this particular crypto.
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Tor Constantino has holdings in Bitcoin and Ethereum.
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