A simple but powerful method of calculating the long term value of Bitcoin.

Many people struggle to value Bitcoin long term - particularly during bear markets like these. We often have trouble visualising what different price predictions would mean in terms of real usage of Bitcoin.

So here is a simple but useful calculation to use when estimating a long term price:

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For every 5% of the entire world’s wealth you believe will flow into / be stored in Bitcoin, give Bitcoin‘s price $1,000,000.

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For example, if we see large flows from real estate, bonds and stocks into Bitcoin over the next 20 years, and Bitcoin captures ~10% of the world’s wealth storage long term - that will result in a Bitcoin price of $2,000,000.

Similarly, a model of ~20% global wealth held in Bitcoin over the next two decades would result in a Bitcoin price of $4,000,000 by ~2042 (this is what I personally believe to be the case).

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The math behind this for those that are interested:

The total amount of global wealth is currently estimated to be 420 Trillion dollars ($420000000000000).

$420000000000000 divided by 21,000,000 bitcoins = $20,000,000 per Bitcoin in today’s dollars (the price of Bitcoin if all of the worlds wealth was in Bitcoin).

$20,000,000 x 5% = $1,000,000

These calculations are representative in today’s purchasing power, and will adjust in line with inflation. It also does not account for coins that have been lost forever.