In a memo published Tuesday titled “How Bitcoin Gets to $1 Million,” Hougan said investors often underestimate bitcoin’s potential because they overlook how much the store-of-value market has grown over time. He said estimating bitcoin’s value involves looking at the size of that market and calculating what share of it bitcoin could capture.

Today, the store-of-value market is just under $38 trillion, including roughly $36 trillion in gold and about $1.4 trillion in bitcoin, Hougan said. Based on that estimate, bitcoin currently represents just under 4% of the SoV market, and would need to capture more than 50% of that total to reach $1 million per coin, Hougan noted.

While the $1 million price tag for bitcoin sounds unrealistic to many investors, Hougan said the mistake many people make when evaluating bitcoin’s potential is ignoring how much the store-of-value market itself has expanded over time.

When the first gold exchange-traded fund launched in the U.S. in 2004, the entire gold market was worth roughly $2.5 trillion, Hougan wrote. Since then, the market has grown to nearly $40 trillion, reflecting a compound annual growth rate of about 13%. He attributed that growth to factors such as rising government debt, geopolitical uncertainty, and easy monetary policy.

If the store-of-value market continues growing at a similar pace, Hougan estimates it could reach about $121 trillion within the next decade.

At that size, bitcoin would only need to capture roughly 17% of the market to reach a price of $1 million per coin, Hougan said.

Hougan said recent developments in the crypto market support that possibility. A few years ago, there were no U.S. bitcoin exchange-traded funds, and institutional ownership was limited. Today, spot bitcoin ETFs have become the fastest-growing ETFs in history, and institutions such as the Harvard endowment and the Abu Dhabi sovereign wealth fund have added exposure to the asset.

At the same time, bitcoin’s long-term volatility has declined. As a result, some professional investors are now considering allocations of around 5%, compared with earlier recommendations closer to 1%, Hougan wrote.

Hougan acknowledged that there are still risks. The store-of-value market may not grow at the same pace as it did over the past two decades, and bitcoin may fail to gain additional market share.

However, he said the projections could also prove "too conservative" if concerns about government debt and fiat currency debasement increase demand for alternative store-of-value assets.

"As I see it, the base case — that the store-of-value market will continue to grow as it has, and bitcoin will continue to gain market share as it has — leads you to much, much higher prices than we have today," Hougan wrote.

Hougan has discussed similar long-term scenarios before. In a 2023 memo, he said bitcoin could reach more than $1 million by 2032. Last month, Hougan also said bitcoin could reach $6.5 million over the next 20 years.

Bitcoin is currently trading at around $70,250, up nearly 2% over the past 24 hours, according to The Block's bitcoin price page.

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source: https://www.tradingview.com/news/the_block:eb72dc097094b:0-bitwise-cio-reiterates-bitcoin-price-could-reach-1-million-as-he-compares-it-to-gold/