Bitwise has set a $1.6 million Bitcoin price target for 2036. Hitting it requires a 34% annual growth rate, close to Bitcoin's 37% rate from 2017 to 2026. JPMorgan's forecasts for the next decade are lower.
Crypto asset manager Bitwise put out a $1.6 million price target for Bitcoin for the year 2036. The Motley Fool's Dominic Basulto calls the target aggressive. In his view, Bitcoin would most likely become the top-performing asset of the next decade if it got there.
The target assumes Bitcoin's historical pace
Basulto's back-of-the-envelope math shows Bitcoin needs a 34% compound annual growth rate to reach $1.6 million. Bitcoin's CAGR from 2017 to 2026 was 37%. Bitwise is therefore basically assuming Bitcoin keeps growing at its long-run historical rate.
However, Basulto questions whether that is a fair assumption, since growth has to tail off at some point. He points to a JPMorgan Chase 10-year forecast that implies 10% annualized growth over the next decade.
JPMorgan projects 17% in its ultra-bullish case
Even in an ultra-bullish scenario, JPMorgan Asset Management expects only a 17% annual clip for Bitcoin, exactly half the rate Bitwise projects. Compounding widens the gap: after a decade of 17% annualized growth from its current price, Bitcoin would be worth about $370,000, less than a quarter of Bitwise's target.
Stocks look slower still. JPMorgan Asset Management is only forecasting a 7.5% annual clip for equities, so 34% returns from Bitcoin would far surpass the stock market.
Seven digits may take longer
Basulto still does not count Bitcoin out. It has a long track record of exponential gains, growing from $1 to $10 to $100 to $1,000 to $10,000 to $100,000, and skeptics said at each stop that it couldn't go higher.
He writes that Bitcoin appears likely to reach $1 million at some point. But if it grows at a long-run annualized rate of 10%, it could take 25 years or longer to get to a seven-digit price.
Source: The Motley Fool
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