At the time of this article, the Bitcoin price in Canada is valued over $60,000. With the mass adoption of cryptocurrencies, and whales like MicroStrategy and Tesla moving Bitcoin’s value up over 200% this year, many speculate about when Bitcoin will be valued at $1 million.
Determining the price of Bitcoin is an incredibly tricky task. Bitcoin has had the kind of success that is difficult to compare to any other asset. It also lacks a substantial history with which an analyst can make sound predictions.
However, unlike assets of the past, Bitcoin is truly global because it is a decentralized, non-fiat digital currency. That means that anyone with a smartphone and internet connection can buy and use Bitcoin.
Nevertheless, with the massive surge of Bitcoin over the last 12 months, speculations are running wild. As stated, one reason for the price of Bitcoin is the result of major purchases by MicroStrategy and Tesla.
Over the first half of 2021, Saylor director of MicroStrategy, and Musk of Tesla have purchased an approximate value of $1 billion Bitcoin. And since then, its value has continued to rise, will only small dips in the current trend.
Saylor and Tesla are not the only whales moving the market. Social Capital CEO and former Facebook FB executive Chamath Palihapitiya is an early Bitcoin investor. Palihapitiya bought a serious amount of Bitcoin in 2013 when it was only about $80 per coin. It is believed that at one point, he owned about 5% of Bitcoin’s monetary base.
In an interview with Anthony Pompliano, Palihapitiya stated that Bitcoin was in a good position to gain from the currency economic shifts and crises of 2020. However, Palihapitiya is still skeptical that Bitcoin is ready for mass adoption. But Bitcoin is a volatile asset, which makes applicability difficult.
Likewise, Elon Musk also does not think that Bitcoin will replace the US dollar. However, that did not stop him from making a $1.5 billion purchase in March 2020.
How is Bitcoin Valued
Unlike bonds, equity, or real estate, which accrue value from their liquidity, Bitcoin’s value is primarily speculative. Nevertheless, Bitcoin continues to creep closer and closer to the $100,000. So why not $1 million? It still has a long way to go, but if Bitcoin continues to grow at a rate of 200% over the next five years, it will make it to $1 million.
Tech giants buying up Bitcoin certainly affects the market. The valuation of Bitcoin is also determined by halving. Halving is scarcity built into the code. It means that about every four years, the Bitcoin mining reward is halved.
In 2008, when Bitcoin was created, 50 new Bitcoin were created and rewarded to the miner every time a block was mined. That reward decreased to 25 Bitcoin, and the halving process continues. In 2020 Bitcoin halved again, which means the current reward is now only 6.25 BTC.
Currently, it is predicted that the last Bitcoin will be mined in 2140, at which point there will be 21 billion BTC in circulation. At that point, there will no longer be mining rewards, which means that no new Bitcoin is created.
Another reason to predict that Bitcoin’s value will continue to increase for the foreseeable future is the current adoption rate of Bitcoin. Each day, more and more companies accept BTC as payment.
Bitcoin is not the only cryptocurrency that is experiencing a heyday. Even companies such as Mastercard and PayPal are partnering with cryptocurrencies and cryptocurrency exchanges. Today, crypto holders can currently automatically convert their crypto into fiat currency for everyday purchases with BitPay’s Mastercard.
It is not only tech companies such as Tesla that recognize the present and future value of Bitcoin. While it is no surprise that you can buy a Tesla with Bitcoin, it may come as a surprise that certain real-estate brokers and mortgage companies now accept Bitcoin as payment.
It is still difficult to predict the future price of Bitcoin, but it no longer seems impossible that Bitcoin will reach $1 million in the future.
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