Contrary to popular belief, Bitcoin’s best days likely remain ahead.
After rising more than 18,000% since its inception, Bitcoin (BTC -1.84%) has already created several millionaires. With such significant growth, it’s natural to wonder if Bitcoin’s millionaire-making abilities are gone. Yet this assumption couldn’t be further from the truth.
With a deeper dive into its fundamentals, along with consideration of recent and future developments, it will become easy to see why the original cryptocurrency still has plenty of upside, even with its price well above $60,000 today. Here are three compelling reasons Bitcoin still has the potential to create millionaires.
1. Early stages of adoption
First and foremost, Bitcoin is still in its early stages of adoption. Several analyses suggest that, in terms of adoption, Bitcoin today is like the internet in the 1990s. During that era, the internet transformed from a niche technology to an essential part of everyday life. Similarly, Bitcoin is gradually transitioning from obscurity to mainstream acceptance as seen in the charts below from famed Bitcoin analyst Willy Woo.
#Bitcoin is at 4.7% world adoption, this is the same as Jan 1999 for Internet Adoption.
You are still early… and that’s backed by the best data available. https://t.co/bq9P50Nban pic.twitter.com/dyyRSFLrC3
— Willy Woo (@woonomic) May 3, 2024
Data supports this trend, with surveys indicating a growing ownership of cryptocurrencies among millennials and Gen Z. According to a recent study, approximately 44% of millennials and 22% of Gen Z respondents reported owning cryptocurrencies. This increasing comfort with digital currencies suggests a broader acceptance of Bitcoin and its potential to become a staple in investment portfolios.
2. A new customer base enters the arena
The recent approval of spot Bitcoin ETFs marks a significant milestone in Bitcoin’s journey. Institutional investors, who were previously restricted from directly purchasing Bitcoin due to regulatory constraints and custodial concerns, can now gain exposure to the cryptocurrency through these exchange-traded funds. These ETFs offer a convenient and regulated way to invest in Bitcoin, without the complexities associated with managing digital assets.
The reason the arrival of these ETFs holds such immense potential is that institutional investors typically have much deeper pockets than the average retail investor like you and me. These ETFs launched in January of this year, and we can already see the significant sums of money that these institutions are bringing to the party. As it currently stands, 563 professional investment firms have reported owning $3.5 billion worth of Bitcoin ETFs.
Most importantly, though, the approval of spot Bitcoin ETFs introduces a transformative element known as game theory. In essence, if Bitcoin keeps up its growth trajectory, the institutions investing in Bitcoin through ETFs today will hold an advantage over those who are hesitant. Inevitably, those institutions will face increasing pressure to add Bitcoin exposure and lead to a “game” of who can grab the most Bitcoin. And with the substantial capital at their disposal, institutional competition to amass Bitcoin holdings could drive prices to unprecedented heights.
3. Programmed scarcity
One of Bitcoin’s most compelling attributes is its programmed scarcity. Unlike fiat currencies, which can be printed indefinitely by central banks, Bitcoin has a finite supply capped at 21 million coins. This scarcity is enforced by the cryptocurrency’s underlying code which governs the rate at which new Bitcoins are created.
A key mechanism that contributes to Bitcoin’s scarcity is the halving event. Occurring approximately every four years, the halving cuts the rate at which new Bitcoins are mined in half, reducing the inflow of new coins into circulation. This gradual reduction in the supply of new Bitcoins ensures that the cryptocurrency will become increasingly scarce over time.
This scarcity, along with increasing trends of adoption, is where the true potential for Bitcoin to maintain its growth trajectory arises. As more individuals and institutions recognize Bitcoin’s value proposition as a decentralized and censorship-resistant form of money, the demand for the cryptocurrency will outpace its supply, creating an imbalance that will result in price appreciation.
The millionaire-making opportunity
While Bitcoin will surely go through several more corrections and crypto winters, it will likely maintain an overarching upward trajectory for decades to come. As to how far it climbs, only time will tell. But if some analysts are correct, a million-dollar price tag could happen before 2030.
Simple math tells us that if Bitcoin does hit $1 million, then you would need to own one Bitcoin to become a millionaire. That might be steep, considering that prices are near $70,000 today. But if Bitcoin’s decade-and-a-half of history has taught us anything, it’s that it consistently surpasses expectations and defies the odds. A million-dollar price tag might be only the beginning.
RJ Fulton has positions in Bitcoin. The Motley Fool has positions in and recommends Bitcoin. The Motley Fool has a disclosure policy.
