Is Bitcoin a millionaire maker?
The world's leading cryptocurrency still has plenty of room to run.
Bitcoin (BTC) has attracted many millionaires, showing a staggering growth of 12,590% over the past decade. This surge would have turned a $10,000 investment into $1.27 million, compared to only around $28,000 for the same investment in the S&P 500.
Bitcoin’s transformation from a niche token to a mainstream asset, now included in ETF price listings, has solidified its status. It has even been adopted as legal tender in El Salvador and the Central African Republic, setting a precedent that other inflation-stricken countries might follow.
Why Has Bitcoin’s Price Continuously Increased?
Bitcoin is mined using an energy-intensive “proof of work” (PoW) method, requiring powerful ASIC miners. Every four years, the mining reward is halved, limiting the supply. The last Bitcoin is expected to be mined by 2140, making it more akin to precious metals like gold than to tokens created via other methods like “proof of stake” (PoS).
This foundation has been supported by the SEC’s decision to classify Bitcoin as a commodity, which paved the way for the first Bitcoin spot ETFs before similar products for Ethereum were approved.
Bitcoin’s price has seen extreme volatility over the past four years. In 2020, it surged by 322% due to stimulus checks and increasing popularity of trading platforms. The third halving in May 2020 further constrained supply. However, in 2022, Bitcoin fell by 48% as rising interest rates shifted investor focus to safer investments. This year, Bitcoin has rebounded by 31%, and 2024 has seen a 44% rise, fueled by the approval of Bitcoin ETFs and expectations of lower interest rates.
Can Bitcoin Create More Millionaires?
While the recent improvements are notable, long-term price targets for Bitcoin remain ambitious. Chamath Palihapitiya predicts $500,000 by late 2025, while others like Cathie Wood believe it could reach $3.8 million by 2030. These forecasts are based on expectations of lower interest rates, increased institutional buying, and greater acceptance of Bitcoin as a store of value.
However, Bitcoin’s current market cap of $1.2 trillion pales in comparison to silver’s $1.7 trillion and gold’s $17.5 trillion. A rise to $500,000 would put Bitcoin’s market cap at $10 trillion, potentially overtaking gold if it reaches $1 million, which would mean a $20 trillion market cap.
Yet, these scenarios might only materialize if fiat currencies face catastrophic declines, driving more investors toward Bitcoin. Even if Bitcoin hits $1 million, a fresh $10,000 investment would only yield about $167,000, falling short of the million-dollar returns of the past decade.
Considerations Before Investing in Bitcoin
The Motley Fool Stock Advisor team recently highlighted 10 stocks to consider now, excluding Bitcoin. If you had invested $1,000 in Nvidia back in 2005, it would be worth $729,857 today. The average return for their stock recommendations is 755%, significantly outperforming the S&P 500’s 165%.
Investors should weigh these insights carefully before committing to Bitcoin, considering both potential returns and the current market landscape.
