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“How high will bitcoin go” is the $300 trillion-dollar question with no shortage of speculation. So, let’s give it our best shot.
How High Will Bitcoin Go?
While there is no reliable way to predict the price of bitcoin in the short term, several mathematical approaches aim to better predict its long-term price potential.
This article will identify the popular bitcoin price targets of $100K, $210K, $288K, $500K, and $2M and examine their methodologies.
Given Bitcoin’s humble beginnings as an internet project just over a decade ago, going from $0 to $10 was impressive, let alone reaching $100,000.
The Bitcoin community celebrates a little extra when price hits round numbers, and $100K will be no exception. But how exactly will bitcoin get to $100K?
The underlying market structure indicates that the second leg of a bull run is forming.
The on-chain metrics suggest a Bitcoin supply shock is imminent, an event where a large percentage of available supply is held by illiquid entities, and new buyers must buy from an increasingly limited liquid supply.
These new buyers will be forced to bid up the price of bitcoin if they want to successfully acquire the asset.
A perfect storm is coming together from a macro sense, too. There are many “firsts” that occurred during the current bull:
- Institutional adoption
- Nation-state adoption
- Publicly-traded miners
- Miners hodling their block rewards
- Bitcoin Futures ETFs
- Mainstream orange-pilling (CEOs, Senators, Tom Brady, every NBA building, etc.)
- Ease-of-use at all-time highs
And while no one is cheering for runaway inflation, bitcoin will benefit from investors turning to hard-money assets to preserve their wealth and purchasing power during inflationary periods.
Additionally, it’s never been easier for retail investors to join the market.
New money has historically been the catalyst for Bitcoin rallies, and plenty of investors still need to get off zero.
According to the graphic below, investors that get off zero before $100K will be included in the “early adopters” class of market participants.
We are still so early.
The spring is coiling — $100K is just a matter of time.
A $210K bitcoin price feels random, but it’s the most mathematically-precise target of any prediction in this article.
The $210K target is derived from a former bond trader named Greg Foss. Here’s an image from Satonomics showing how Foss arrived at his price target:
Bitcoin would absorb around $45 trillion if it were to hypothetically capture just 5% of total global assets.
Forty-five trillion divided by 21 million total BTC puts the value of a single bitcoin at $2,142,857.
Assume there’s only a 10% chance of this happening and a 90% chance that bitcoin goes to zero.
The expected value per coin of this risk-adjusted scenario equates to $210,000 per bitcoin.
Greg Foss’s framework demonstrates a probabilistic approach to investing and risk management.
His perspective captures the asymmetric potential of Bitcoin, where the price target remains bullish despite a 90% chance the 1:1 downside risk occurs and only a 10% chance the disproportionate upside occurs.
The $288,000 price target is based on the Bitcoin Stock-to-Flow Cross Asset (S2FX) Model that attempts to value bitcoin based on scarcity.
The model compares bitcoin’s “stock” to its “flow,” where stock is the amount of bitcoin in its existing stockpile and flow is its yearly production.
A high stock-to-flow ratio suggests that an asset will retain its value because its supply does not increase to the degree that it devalues the existing stockpile.
Stock-to-flow has historically been used to evaluate scarce assets with relatively predictable supply rates, such as silver and gold, with S2F ratios of 33.3 and 58.3, respectively.
But one day, a pseudonymous investor known as PlanB decided to apply S2F to Bitcoin and model its value based on its digital scarcity.
He noticed a statistically significant relationship between Bitcoin’s stock-to-flow ratio and its market value, essentially revealing that buyers and sellers are valuing Bitcoin based on its scarcity.
Just recently, PlanB updated his model to account for the price discovery of gold and silver, hence the “cross-asset” part of the model’s title.
Again, he noticed a relationship between Bitcoin’s S2F ratio, Bitcoin’s price discovery, and the value trajectories of gold and silver.
It appears that the market is discovering the value of Bitcoin on a similar timeline that it discovered value in gold and silver, two store-of-values that belong in a completely separate asset class from Bitcoin.
Therefore, based on Bitcoin’s S2F ratio of 56 in 2020-2024 and its similar value trajectory to other historic store-of-values, the model projects Bitcoin’s market value to reach $5.5 trillion by 2024, equating to a BTC price of $288,000.
Here’s an image of the S2F model:
The $500,000 bitcoin price target is derived from the Gold 2.0 narrative, which is a framework used to value bitcoin based on its similarities to gold as a store of value.
Today, the market cap of gold is around $9 trillion, while Bitcoin’s is just above $1 trillion.
If the market decides that Bitcoin is on-par with gold from a store-of-value perspective, then Bitcoin is currently undervalued by a multiple of 9.
A 9x appreciation from current levels would send the price of bitcoin beyond $500,000 per coin.
This framework was made popular by Tyler and Cameron Winklevoss, founders of the crypto exchange Gemini.
The approach does not require capital to flow out of gold and into bitcoin, although that would certainly accelerate the flippening.
Generally speaking, the person that stores their wealth in gold may be hesitant to convert it to a 12-year old technology that is unknown to them — and that’s okay.
But as the generational wealth transfer from baby boomers to millennials, Gen X, and Gen Z plays out, will the younger generation be more inclined to store their value in a rock or a digitally-native asset like bitcoin?
The $2,000,000 price target puts us into the early stages of Hyperbitcoinization, which is the inflection point at which Bitcoin would become the default value system of the world.
Bitcoin would have to eclipse several milestones to reach $2M. Here are some of the key ones:
- Publicly-traded companies add bitcoin to their treasury reserves
- Nation-states adopt bitcoin as a treasury reserve asset and announce it
- Banks offer Bitcoin-native services
- Global real-estate purchases facilitated by Bitcoin network
- Global energy market reprices in Bitcoin
- Bitcoin supply becomes largely distributed
Bitcoin trading at $2M implies that a substantial percentage of people have lost faith in the US dollar, other fiat currencies, and fiat-denominated assets to varying degrees.
It’s not obvious how much time will pass between a $2M price target and a potential Hyperbitcoinization scenario.
An announcement from a nation, or group of nations, could trigger a Bitcoin super cycle where price rapidly increases in a very short period of time.
In an interview with podcast host Laura Chen, Michael Saylor was asked if he had plans to ever sell his bitcoin if he believed the market to be overheated.
Saylor responded, “If you have the superior asset, it’s going up forever, Laura.”
The Forever-Laura price target means that Hyperbitcoinization has run its course, and bitcoin has become the global reserve asset.
At this point, valuing bitcoin in US dollar terms will not make much sense. Instead, the following:
1 BTC = 1 BTC
Bitcoin’s volatility will largely stabilize, and the incentive to spend sats will outweigh the opportunity costs of hodling to prevent missing out on further appreciation, considering all of the appreciation will have occurred.
Goods and services will be priced in BTC or Sats, and the depreciating effects of technology will actually be felt in everyday prices.
Historically, the hardest version of money prevails, meaning the money that is most difficult to produce more of to add to the existing supply, thereby devaluing it.
Bitcoin is the hardest money to ever exist. It’s on the right side of history.
Bottom Line: Bitcoin Price Targets
The question “how high will bitcoin go?” has many speculative answers, and some still believe that it will go to zero.
While the likelihood of a Black Swan event decreases with each passing day, the number of Bitcoin bull cases seems to be increasing.
Some of the bull cases mentioned are unrelated, and some overlap. But what happens if two unrelated bull cases come to fruition? Three? Four? Seven?
It’ll be some time before we have a definitive answer to this question, but there’s plenty that can be done today to prepare.
- Best Bitcoin Exchanges
- What is the Bitcoin Halving?
- Bitcoin Top Cap Model
- Bitcoin Delta Valuation Model
This article is for informational purposes only. It is not intended to be investment advice.