Theories abound about the future of Bitcoin price, with predictions varying wildly from a collapse to zero, to astronomical heights.
One of the most commonly touted and general accepted views is the idea that Bitcoin produces an annual 2x return on average, and the best thing to do is simply buy and hold.
But how true is this?
Well, Adam Back – the Co-Founder and CEO of crypto mining giant Blockstream – said the maths checks out.
When considering historical data from the decade beginning January 2013 to end December 2022, you can calculate a total return over the decade of 1,200x.
This breaks down to an annualised 2.036x return – confirming the crypto wives tale about double annual returns.
However, the Co-Founder of the tokenised mining bonds giant, went further to assert a huge value prediction for Bitcoin if that rate of return is to continue.
“If that continues we’ll cross $10m Bitcoin and $200 trillion market cap by the end of the next 2 halvenings – about 9 years,” claimed Back.
This initially seems an insane figure, indeed, the global economy when measured by GDP comes to a sum of only $85 trillion – so to posit an idea of a $200 trillion market cap is bold.
How is a $200 trillion Bitcoin (BTC) market cap possible?
early this year i was curious of the claim "bitcoin 2x's per year on average". it checks: the decade jan 2013 – dec 2022 #bitcoin went up 2.036x/year (1200x in a decade). if that continues we'll cross $10mil/BTC and $200 tril market cap by end of next 2 halvenings, about 9 years. pic.twitter.com/mqmO2SRdAv
— Adam Back (@adam3us) February 12, 2023
It seems the CEO believes this will result from a huge shift in capital from traditional fiat-based financial assets to self-sovereign assets such as Bitcoin.
An event likely driven he explains by a global currency crisis, which he believes will begin in the developing world – what he describes as ‘weak currencies’.
“Adoption could have hyperbitcoinization spurts, where rapid viral adoption nukes a weak currency in a hyper-inflationary frenzy, and domino crash 20 bottom-tier currencies – people get pragmatic and adapt fast if they see fiat melting, a rush of others protecting savings via Bitcoin,” explained the CEO.
“Bitcoin does not have to absorb anywhere near $100 trillion to reach that market cap, due to relative thin trading, and cold storage investors. If Bitcoin really gets moving, it will become harder to get anyone to sell.
“Given volatility, I think Bitcoin can overshoot wildly and tap one of these $100-300 trillion market caps, correct and then regain a steadier adoption over time, I suspect people with average entry points, relative to then current price won’t have much incentive to sell in size,” he added.
A huge aspect of this growth could come from the development of Bitcoin-native financialization.
Surprisingly, despite attempts at growth through the lightening network, stack network, and taproot – there has been remarkably little advanced developments built for Bitcoin.
And this area of tech growth could unlock the full potential of Bitcoin as an asset insists Back.
“Bitcoin structured products, mortgages backed by real-estate but interest guaranteed by Bitcoin, other products make Bitcoin easier to use for more people, and match risk profiles – which creates more growth”, suggested Back.
“That probably means sidechains as a trade-off, more lightening optimization, other layer2s – we don’t have much time as tech takes time to mature.”
Crypto Twitter Reacts to Bold Bitcoin Predictions
Others however took shot at Back’s bold prediction and claims.
Miners seem to try and hodl as long as possible. Only selling to pay costs. No reason to assume they would have to sell all $2.25B by then unless ASIC supply & energy sources can keep up with hash power growing as fast as the marketcap.
— The Narrator (Fight Club) (@TheNarratorBTC) February 12, 2023
Some even questioned the Blockstream CEO’s maths.
i think it can, or easily get faster. most technology and network adoption S-curves take-off past a tipping point. i don't think bitcoin got to a tipping point yet, still early.
— Adam Back (@adam3us) February 12, 2023
Others simply bemoaned the bleak future it would take to bring the CEOs prediction to fruition.
2032. have you looked out the window lately :) trending to idiocracy.
— Adam Back (@adam3us) February 12, 2023
Only time will tell.
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