Bitcoin to $1 Million? Bitwise Analyst Breaks Down the Path to Value Transformation

Bitwise CIO Matt Hougan argues in a new analysis that Bitcoin's valuation model needs a revamp. Traditional static assessments fail to fully reflect its long-term potential as a digital reserve asset. He points out that Bitcoin is gradually being seen by the market as a store of value as important as gold, and its pricing should be based on the size of the entire reserve asset market and its share within it, rather than looking at its current market capitalization in isolation.

Currently, the global reserve asset market (mainly including gold and Bitcoin) has a total size of approximately $38 trillion, with gold dominating. Bitcoin's market capitalization is approximately $1.4 trillion, accounting for less than 4%. If the current market structure persists, Bitcoin would need to occupy more than 50% of the reserve asset share to reach $1 million per coin, a goal that seems unattainable.

However, Hougan emphasizes that this market is not static. Over the past two decades, the market size of gold as a traditional reserve asset has expanded from approximately $2.5 trillion in 2004 to nearly $40 trillion, driven by continued global monetary easing, geopolitical uncertainty, and weakening confidence in fiat currencies. He predicts that this market is expected to expand further to $121 trillion in the next decade. In this scenario, Bitcoin only needs to gain a 17% market share to achieve a price target of $1 million per coin. While challenging, this percentage is not unattainable. In recent years, the allocation ratio of global institutional investors to Bitcoin has increased from 1% to nearly 5%. The approval of spot Bitcoin ETFs in the United States has provided compliant access channels for large capital such as pension funds and fund companies, significantly accelerating capital inflows. Hougan also reminds that the above predictions rely on multiple assumptions: the expansion rate of the reserve asset market, the penetration efficiency of Bitcoin replacing traditional gold, the stability of the regulatory environment, and the continuous improvement of technology and acceptance. If any of these aspects are hindered, the million-dollar target may be delayed or difficult to achieve. However, he believes that with the deep participation of institutional capital, Bitcoin is transforming from a fringe asset to a mainstream reserve asset, and its value reassessment process has quietly begun.