3 Bold Predictions For Where Bitcoin Could Be 4 Years From Now (The Last One Might Shock You)

Since reaching an all-time high in March, Bitcoin (CRYPTO:BTC) has largely disappointed crypto investors. Bitcoin’s price is still trading around $68,000, which is about where it was three months ago.

Moreover, the two big Bitcoin catalysts of 2024 – the launch of new spot exchange-traded funds (ETFs) and the halving of mining fees – have now come and gone. So is it time to rethink where Bitcoin might go in the next few years? Let’s take a closer look.

base case

The base case assumes spot Bitcoin ETFs will continue to see new inflows of investor money and Wall Street will continue to embrace Bitcoin as a new asset class for portfolio diversification purposes. Over time, this constant flow of new money will push Bitcoin higher.

But how high? There are trade-offs in Bitcoin becoming mainstream, and one of them is that Bitcoin may begin to behave more and more like a traditional asset. This means it can no longer provide the astronomical returns it once did.

In the decade between 2011 and 2021, Bitcoin generated annual returns of 230% annually, while tech stocks generated annual returns of 20%. So a more reasonable estimate for Bitcoin’s future annual return might be closer to 20% rather than 230%.

Using this 20% growth estimate, four years from now the price of Bitcoin could more than double from its current level of $70,000 to around $150,000. That’s impressive, but nowhere near the $1 million price some Wall Street analysts are currently predicting.

bull case

The bullish scenario assumes that the constant flow of money into new Bitcoin ETFs will turn into a tsunami. He also assumes that institutional investors will begin to make Bitcoin one of their largest holdings. Currently, institutional investors can only allocate 1% or less of their assets to Bitcoin. But what if they increase that number to 5%, 10%, or even 20%? That’s when the Bitcoin price can really rise.

Image source: Getty Images.

At the same time, the bull scenario assumes that the highly anticipated Bitcoin halving will occur as initially expected. In the previous three halving cycles (in 2012, 2016, and 2020), the price of Bitcoin has absolutely exploded. So why not this time too?

For example, in the previous halving cycle, the price of Bitcoin jumped from $10,000 in May 2020 to $60,000 in April 2021. Therefore, any bullish prediction would need to include a long period of very rapid growth in Bitcoin price.

Finally, the bull scenario assumes that Congressional lawmakers will pass pro-Bitcoin legislation after the 2024 elections. We’re already hearing rumors of a major shift in Washington DC’s perspective on crypto, and if the next president is positive about Bitcoin, then things could get very interesting.

The story continues

bear case

The bear scenario is basically an “I told you so” scenario. This is what happens when all the warnings of high-profile investors turn out to be true. For years, some prominent figures on Wall Street have claimed that Bitcoin is essentially a giant Ponzi scheme. And Warren Buffett said he wouldn’t pay $25 for all the Bitcoin in the world.

This doesn’t mean Bitcoin will drop to zero in the next four years; It just means it may not deliver the kind of life-changing wealth some people expect. For example, what happens if the halving fizzles? Or what if people stop putting their money into new Bitcoin ETFs? Or what if any crypto legislation in Congress stalls due to political infighting? In such a scenario, Bitcoin may never become mainstream. And if Bitcoin doesn’t break into the mainstream, there’s no way it can reach $1 million.

Consider a range of potential outcomes

It is important to consider a number of different implications when considering Bitcoin. It doesn’t matter whether you call these “bull scenarios” or “bear scenarios”; You realize that just a few small changes in your underlying assumptions can have a big impact on where you think the Bitcoin price will go next.

Consider Ark Invest’s Cathie Wood, for example. Although he predicts that the Bitcoin price could reach $1.48 million by 2030, he also presents a bear scenario in which Bitcoin could only reach $258,500. These wide swings in results are based on adjusting just a few key parameters, such as the expected portfolio allocation to Bitcoin by institutional investors.

Personally, I still believe that Bitcoin will rise in the long run. But I’m starting to dial back some of my expectations for Bitcoin over the next four years. Once you start playing with the numbers, you’ll realize just how right Bitcoin has to go to reach that legendary $1 million mark.

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Dominic Basulto has positions in Bitcoin. The Motley Fool has positions in Bitcoin and recommends it. The Motley Fool has a disclosure policy.

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