Bitcoin to surge to $1 million in 6 years as it becomes more scarce than gold, says crypto-asset expert
(Kitco News) The popular cryptocurrency is known for its volatility. So don’t be surprised if prices soar to $ 1 million this decade as Bitcoin becomes scarcer than gold and large pension funds start to pile up, according to Fred Pye, President and CEO of 3iQ.
“Bitcoin is already the most successful investment in the history of the world. Nothing has gone from zero to $ 1 trillion in ten years, ”Pye told Kitco News, referring to Bitcoin’s market cap.
When asked to compare Bitcoin and Ethereum to commodities, Pye described Bitcoin as gold and Ethereum as Dr. Copper.
“Gold is a store of wealth. The scarcity of gold and bitcoin is the same right now, but two years from now, bitcoin will be twice as scarce as gold, ”he said.
On the other hand, the second largest cryptocurrency Ethereum behaves more like Dr. Copper, as it represents the overall health of the digital economy, just like copper is known to predict turning points in the health of the global economy.
“Like Dr. Copper. When copper goes up, the economy as a whole is doing very well. Likewise, the general health of the digital economy increases as Ethereum increases, ”he added.
The limited supply of Bitcoin and the halving process make massive price jumps possible. Bitcoin halving happens every four years, at which point the reward for mining Bitcoin transactions is cut in half, which also lowers the rate at which new bitcoins come into circulation. The last Bitcoin halving took place in May 2020.
If you look at past and future halves, Bitcoin will hit $ 100,000 in the next two years and then hit $ 1 million four years later, Pye pointed out.
“The supply of Bitcoin is halved every four years. We have seen the price of Bitcoin go up ten times every time it was halved, from $ 100 to $ 1,000, from $ 1,000 to $ 10,000. Right now we’re on our way from $ 10,000 to $ 100,000. Four years later, six years from now, we expect that we will potentially go from $ 100,000 to $ 1 million. And after that we would go from $ 1 million to 10 Millions of dollars rise when the characteristics of scarcity play right. “
Discussing the recent wave of volatility in the crypto space, Pye said that a massive sell-off like the 50% retracement in May is “perfectly normal” for a new asset.
In late May, Bitcoin plunged from its all-time high of $ 64,895.22 in April to nearly $ 32,000. “Bitcoin went from $ 1,000 to $ 20,000 and then back to $ 3,000 and then to $ 60,000. And now it’s in the middle of $ 30,000 to $ 40,000, ”he said.
What sparked the snowball effect was China trying again to ban the use of Bitcoin transactions as well as mining. “And it’s really worrying for a country like China because everyone knows China has currency controls. And now you have this trillion dollar fortune that you can’t control, and that’s why we love it,” Pye said.
But China’s policies have no bearing on the overall investment case for Bitcoin, noted the CEO of 3iQ, which offers Bitcoin and Ethereum ETFs on the Toronto Stock Exchange.
What is happening behind the scenes is that large pension funds and other large institutional investors are doing their bitcoin due diligence. Over time, they will start investing which will be explosive for the cryptocurrency.
So far, Bitcoin has only seen cowboy-type hedge funds with Elon Musk-type personalities investing in bitcoin while the real money stayed away.
“Now the real decision makers who control the real wealth of the world are starting their due diligence because we conduct daily due diligence meetings with organizations and institutions that want to become familiar with this area,” said Pye.
It will be some time before the big players get involved. But it’s not due to a lack of interest. That’s because Bitcoin, as a digital asset, does not currently fit into their investment policy.
“Your statements about investment policy have never considered a new technology or a new asset class. They all talk about bonds, stocks, gold, copper or silver or other commodities. But Bitcoin is a unique asset class of its own and you actually need to go back to your board of directors or retirement board and change your investment policy statement so that you can actually invest in it. So it won’t be quick, but it does, “explained Pye.
And this is one of the main reasons Bitcoin isn’t in a bubble yet. “They know it’s a bubble if it’s everyone’s own. But right now they don’t own the largest pension funds in the world. We’re far from the bubble,” he said. “It took the pension funds ten years to use e-mail. So I understand that pension funds need more than ten years to use Bitcoin. “
For the average investor, it is great news that large institutions have not come into contact with Bitcoin just yet as the price will reflect it. And big players can afford to buy Bitcoin for $ 1 million, but it might be too late for the average investor, Pye added.
However, owning digital gold doesn’t mean you should own real gold, noted Pye, explaining that gold is part of the future-proof portfolio. “If you have gold, you should own bitcoin. If you own bitcoin, you should have some gold because of all the money printing. The problem is, stopping the printing presses is very difficult. When they do, you want to own bitcoin and you do want to own gold, “he said.
Regarding gold, Pye highlighted that it is Canada’s history of gold and commodity pools in general that has made Bitcoin ETF approval easier.
“The reason the very first product approved was a closed-end fund is because Canada understands commodity pools. Our country built on that. And our discussions with the Ontario Securities Commission were to create a resource pool that would have the digital asset as a commodity as opposed to a physical asset as a commodity, ”he explained.
The problem in the US when it comes to allowing a Bitcoin ETF is the lack of that experience, he added. “If they were to start an ETF, people can usually put bitcoin into the ETF and get shares in the fund. The problem is, you can’t trace where those bitcoins came from fast enough and this could potentially happen. “Are good for money laundering. And that’s the SEC’s top priority. In Canada, while the Ontario Securities Commission can come into my office with cash-settled ETFs and our pool of commodities, they can track anti-money laundering compliance. for every coin we’ve ever bought. “
Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure the accuracy of the information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is for informational purposes only. It is not an invitation to exchange goods, securities or other financial instruments. Kitco Metals Inc. and the author of this article assume no responsibility for any loss and / or damage that might arise from the use of this publication.