Analyst Has Bitcoin Reaching $ 4 Million

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Bitcoin on motherboard

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Venture capitalist Tim Draper has been very visible in recent years saying that bitcoin will hit $ 250,000 by the end of 2022 or early 2023. Trip Chowdhry at Global Equities Research doesn’t have what Draper has, but his $ 4 million price target is certainly more bullish than the drapers.

Bitcoin technology is configured so that there are only 21 million bitcoins created. Currently, there are about 18.8 million in circulation at a price of about $ 41,500. This brings the market capitalization of all bitcoin to around $ 780 billion.

To put it in perspective, Apple AAPL has the largest market cap of any company in the world at $ 2.4 trillion, Microsoft MSFT is $ 2.1 trillion, and Alphabet / Google is at $ 1.8 trillion. of dollars.

If bitcoin hits Chowdhry’s $ 4 million target and all bitcoin is created, the cryptocurrency market would peak at $ 84 trillion. Even Drapers’ goal of $ 250,000 would give them a value of $ 5.25 trillion.

Bitcoin Price Table

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Chowdhrys 5 Reasons Bitcoin Can Reach $ 4 Million

Trip Chowdhry has 5 reasons why a single bitcoin will be worth $ 4 million.

1) Bitcoin is fighting for renewable energy

Chowdhry believes that as the price of bitcoin increases, the number of miners and systems to create bitcoin will increase. This will lead to an increase in the demand for renewable energy to operate them.

I agree that as its price increases, there will be more miners and bitcoins created. I don’t see the connection between an increase in demand for energy, be it renewable or fossil, leading to higher bitcoin prices.

2) Bitcoin to get a boost from the IRS

Chowdhry points out that Bitcoin transactions under $ 10,000 will not have to be reported to the IRS under the proposed legislation and therefore earnings will not be taxed. This could lead to an increase in demand, but keep in mind that this is a bill, which could be amended in the current bill before Congress or after.

It seems that currently the wash sale rules do not apply to cryptocurrencies. An investor can sell bitcoin if he suffers a loss and does not have to wait the 30 days it takes when a stock is sold and redeemed to reap a tax loss.

3) The SEC backs bitcoins in the balance sheets of state-owned companies

Chowdhry believes that since three companies (MicroStrategy MSTR, Tesla TSLA, and Twitter) have bitcoins on their balance sheets, all other companies will need to do so as well. With every mutual fund needing to buy it or becoming obsolete.

It’s another effort to say that every company and every mutual fund will buy bitcoin. A huge majority of CFOs are too conservative to have a highly volatile asset like bitcoin on their balance sheets. If the price drops, the number of shareholder lawsuits will skyrocket.

It would not be surprising to see a good number of mutual funds putting some of their assets under management in bitcoin or other cryptocurrencies. However, it will take at least a few years, if not more, before a large amount of capital is committed to them.

4) Bitcoin will continue to soar

This reason is related to the fact that MicroStrategy buys bitcoin when the price drops. While the company has made a commitment to buy bitcoin as discussed in this Forbes article, it has taken on a lot of debt and has already used any excess cash available to buy bitcoin. It may not have a lot of additional purchasing power to support bitcoin prices.

5) Regulators Can’t Do Nothing As Bitcoin Owners And Related Entities Are The Administration’s Main Donors

Chowdhry does not provide further details, at least in the note I saw, as to why this is the current situation and will still be valid. Political winds can change and what was once safe may not be in the future.

Earth at night held in human hands.

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How $ 84 trillion worth of bitcoin compares to other investments

If bitcoin can grow to $ 4 million and the 21 million is created (which it will be if the price approaches $ 4 million), their market cap would be $ 84 trillion. It would pull other cryptocurrencies higher as well, but for now let’s leave their value out of this analysis.

The total market capitalization of the 500 companies in the S&P 500 is just over $ 37 trillion. The bitcoins would then be worth more than twice the value of all those companies.

The Bureau of Economic Analysis published this week that the size of the US economy is $ 22.7 trillion. At $ 84 trillion, bitcoins would represent 3.7 times the entire US economy.

The World Bank estimates that global GDP has grown from $ 87.6 trillion in 2019 to $ 84.7 trillion in 2020. All bitcoin would be worth the entire global GDP if it reached $ 4 million per bitcoin.

CompaniesMarketCap.com estimates that there are $ 11.5 trillion in gold reserves above ground. For bitcoin to match the market cap of gold, it would need to be around $ 547,600.

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