Matt Hougan, Chief Investment Officer at Bitwise Asset Management, has stirred debate in the financial world by forecasting that Bitcoin could eventually hit the coveted $1 million benchmark. This bold prediction, often met with skepticism, rests on a fundamental reassessment of how Bitcoin should be valued, according to Hougan. He argues that prevailing assumptions underestimate the cryptocurrency’s true potential and urges the industry to reconsider the core factors underpinning Bitcoin’s future price trajectory.
Rethinking Valuation Models for Bitcoin
In his latest published analysis, Hougan challenges static, traditional valuation methods, contending they fall short of reflecting Bitcoin’s full promise. He points out that, much like gold, Bitcoin is increasingly regarded as a store of value, which means its market size should be evaluated in this context. Given Bitcoin’s fixed supply, Hougan believes its valuation framework needs to incorporate both the total magnitude of the store-of-value market and Bitcoin’s share within it, rather than relying solely on static calculations.
The Expanding Global Store-of-Value Market
According to Hougan’s analysis, gold and Bitcoin together constitute the world’s store-of-value market—an arena now worth about $38 trillion. While gold dominates this landscape, Bitcoin’s present market capitalization is around $1.4 trillion, translating to just under 4% of the total market. For Bitcoin to cross the $1 million threshold at today’s market sizes, it would need to capture well over half of the entire store-of-value sector—a challenge that may seem improbable based on current dynamics.
However, Hougan pushes back against the idea that market size is static. He notes that, historically, the store-of-value market—driven by gold—has expanded, especially in the past two decades, as macroeconomic uncertainties and shifts in monetary policy spurred its growth. This trend, he suggests, demonstrates the real possibility of further market expansion, which could facilitate a dramatic rise in Bitcoin’s valuation.
Institutional Interest and the Path to Growth
Historical data shows the gold market ballooning from approximately $2.5 trillion in 2004 to nearly $40 trillion today. Hougan envisions the global store-of-value market reaching $121 trillion in the coming decade. In that scenario, Bitcoin would only need to secure a 17% share to achieve a market price of $1 million per coin, making the target much more plausible if current growth trends persist.
“If the global store-of-value market were to approach $121 trillion within ten years, Bitcoin would need only 17% of the market to reach a price of $1 million,” Hougan noted in his published report.
Growing institutional interest is helping drive this narrative. The proportion of portfolios allocated to Bitcoin has climbed from just 1% to nearly 5% in recent years. The approval of spot Bitcoin exchange-traded funds (ETFs) in the United States has enabled major asset managers and institutional funds to deepen their participation in the market, contributing to Bitcoin’s steady ascent.
Yet, Hougan is careful to acknowledge that his projections come with caveats. He stresses that these scenarios hinge on several assumptions, including the pace at which the store-of-value market expands and Bitcoin’s ability to capture additional market share. Should either of these factors fall short, the million-dollar milestone could remain out of reach.
Hougan underlines that the biggest misstep in valuing Bitcoin is treating its market share as fixed in a growing sector. When both the store-of-value market’s expansion and Bitcoin’s rising share are factored in, he maintains, the cryptocurrency’s potential price could soar far beyond current levels.
At the time of publication, Bitcoin was trading at approximately $70,000.
