Can Bitcoin Really Reach a $1 Million Price Tag? Here’s why Cathie Wood thinks so.

Cathie Wood and her team at Ark Invest are known for their love of innovation and disruptive technologies. Bitcoin (BTC 3.20%). They believe the world’s first cryptocurrency has the potential to revolutionize financial markets and even the idea of ​​money itself.

Their confidence in Bitcoin is so strong that analysts at Ark Invest released a report claiming that its price could be worth more than $1 million by 2030.

But for Bitcoin to get to that level, it would have to increase by more than 4,000% in just seven years. While Bitcoin is no stranger to massive runs, this prediction seems strange at first glance. Fortunately for us, Ark’s analyst provided a detailed breakdown of how Bitcoin could reach the million-dollar mark.

There is more to Bitcoin than just the price

One of the main reasons Ark believes Bitcoin will continue to rise in price is because of its consistent growth in the network’s fundamentals. Similar to corporate earnings reports, data on Bitcoin’s blockchain can be evaluated to measure health and growth.

To capture this, analysts evaluated blockchain metrics on three different occasions when Bitcoin’s price was at $15,800. This price is significant because it was the lowest price Bitcoin fell to in the current bear market, reaching that bottom price in November 2022.

The other two times were in December 2017, which was an all-time high at the time, and then after a bear market that spanned most of 2018 and 2019. That downturn sent Bitcoin prices as low as $3,100 before climbed back to $15,800 in November 2020.

Ark evaluated metrics such as hash rate (a statistic that quantifies Bitcoin’s computing power), the total supply of Bitcoin that had not moved in the past year (a gauge to measure investor behavior), and the number of Bitcoin addresses with a non-zero balance ( a number that helps assess network growth).

Despite reaching this price of $15,800 on three separate occasions, these metrics turned out to have grown significantly. Here is an overview of each of these calculations at these different times:

When you analyze Bitcoin from this angle, rather than just the price, a few things become clear. First, Bitcoin’s network computing power continues to strengthen, a sign that it is becoming more decentralized and secure over time. Second, investors are holding Bitcoin longer, and this trend is usually seen as an indication of their confidence that prices will rise in the future. And finally, the number of addresses has almost doubled in just five years, showing that the network has experienced exponential growth. Ark believes that this combination of the Bitcoin network’s resilience and growth, even in the midst of bear markets, will continue into the future and provide the fuel to reach new all-time highs.

Good, better and best scenarios

But how high can Bitcoin really go? To quantify just how explosive this growth could be, Ark presented three separate scenarios for Bitcoin’s journey through 2030. They divided the three into a bear case (the worst-case scenario), a base case, and a bull case (the best-case scenario).

For the bear case, Ark believes Bitcoin could be worth around $258,500. The base case has an estimated value of $682,000. And the bull case, a whopping $1.48 million.

Just because Ark thinks a $1.48 million price tag is in the cards, there’s no guarantee it will happen. While that would be nice to see, the company doesn’t have a crystal ball that predicts the future. But their analysis of Bitcoin’s network at three different points makes a compelling case that bear markets and crypto winters are just small obstacles in Bitcoin’s path to price appreciation.

Only time will tell if Ark’s analysis turns out to be true. With its hash rate last moving more than a year ago, and the number of non-zero balances all at near all-time highs, buying Bitcoin today looks as enticing as ever, as the price is still down by more than 65% from the peak of $68,000.