Bitcoin’s Trillion Dollar Market Cap Question: Top 8 Steps to Hit $1 Trillion
Will the crypto industry ever reach a $1 trillion market cap? Based on the performance of markets in 2018, it may seem unlikely.
Today, the market cap of the entire crypto industry is sitting at $192 billion, a sharp drop from its high point near $800 billion in January 2018.
Good news, however, might be just around the corner. We could be just a few months away from the approval of the world’s first bitcoin ETF – something that could happen as early as September 2018 but will likely occur in January or February 2019. Approval of a bitcoin ETF – or any crypto ETF – could set off the longest bull run in bitcoin history.
That bull run could very well lead us to the magical $1 trillion market cap number.
In a recent blog post, Trading Room explored the idea of the crypto market reaching the $1 trillion mark. We were just a stone’s throw away from that mark in January 2018 – just a measly $240 billion away. The next bull market, however, could easily push us past that mark.
“Crypto enthusiasts are sitting on the edge of their seats. Bitcoin is ‘destined' to receive ETF approval and to every bull, that is just about the best and only good news on the horizon right now. But is another bull run possible in 2018? And more importantly: can we get to that coveted trillion-dollar market cap?”
Trading Room goes on to explain that they believe the price of bitcoin will “skyrocket” after ETF approval.
Nevertheless, Trading Room isn’t making the same comparisons as other outlets. Some analysts point to the approval of the first gold ETF as an example. The price of gold surged to an all time high after approval of the first gold ETF. Based on this, according to some analysts, the price of bitcoin will skyrocket after a bitcoin ETF is approved.
Trading Room doesn’t agree with this sentiment.
“According to the pundits the reason for [bitcoin to skyrocket] is simple. ‘Because that’s what happened to gold.' Accompanying that statement is a nice chart for gold and a chart for bitcoin either side by side or superimposed and guess what? They look similar. Unfortunately, that’s not how it works. There is a blueprint for a trillion-dollar market cap, but its basis doesn’t lie in historic events. It lies in future implications.”
How Will Bitcoin Reach a $1 Trillion Market Cap?
Bitcoin has the potential to reach a $1 trillion market cap – and we don’t need historical gold price data to prove it.
The approval of a bitcoin ETF would be huge for a few key reasons. First and most importantly, a bitcoin ETF would make it easier and safer for someone to invest in bitcoin. Instead of buying “real” bitcoin from an exchange, for example, an investor could purchase a share in a bitcoin ETF. That share is connected to a real bitcoin held by the fund. However, the investor doesn’t need to worry about storing or securing that bitcoin.
At the same time, all funds held in the bitcoin ETF are insured. That’s an important difference from your ordinary bitcoin storage. Typically, if you mess up with your bitcoin storage, then you have no recourse. There’s no customer hotline to call.
Step by Step Path from $100 Billion to $1 Trillion
After explaining the benefits of a bitcoin ETF, Trading Room goes onto explain the step by step process that will take us from a $100 billion bitcoin market cap to a $1 trillion market cap:
Step 1) ETF Rejection
The SEC has already rejected 15 different bitcoin ETF proposals. They rejected the bitcoin ETF proposed by the Winklevoss twins last month. ETF rejection seems like bad news for the crypto industry – and it is. Casual investors wake up and read headlines about how yet another bitcoin ETF is rejected.
Here’s where things get interesting though: these investors are still interested in bitcoin. But when a bitcoin ETF is approved, they want to get in cheap. Bitcoin ETF rejection will push the price down. Here’s how Trading Room explains it:
“…rejection works in their favor, because with millions to invest, receiving ETF approval when BTC’s price is at $7.500 is a large difference from receiving approval when BTC is at $5.800. Expect the market to “shake out the weak hands” during the upcoming weeks, meaning a large push down and heavy price volatility that destroys limit orders and touches every stop-loss on the way up and down.”
We’ve already seen this in the last few weeks, with bitcoin touching new yearly lows. Despite the fact that a bitcoin ETF approval seems to be inevitable within the next 6 months, the price of bitcoin is trending down.
Step 2) Another ETF Bid Pending
After an ETF is rejected, you can adjust the ETF proposal and seek approval again. This is what happened to the Winklevoss twins multiple times. The Winklevoss twins had their ETF rejected, and they’ve already put another ETF up for approval. With each ETF rejection, changes are made to the ETF based on comments from the SEC.
With every rejected bitcoin ETF, approval comes closer. The SEC isn’t rejecting a bitcoin ETF because they hate bitcoin. They’re rejecting a bitcoin ETF because ETFs need to meet certain rules and requirements.
Step 3) ETF Approval
A bitcoin ETF will eventually be approved. That part seems inevitable. Approval could happen as soon as September 2018, but we will most likely have to wait until January or February 2019.
A bitcoin ETF would spark a huge bull run. It’s a self-fulfilling prophecy. Everyone expects the price of bitcoin to skyrocket after approval of a bitcoin ETF, so everyone buys bitcoin, driving the price upward.
Step 4) Whales Enter the Market
You can look at order books online today to find the occasional whale entering the market. You might see a bid for 1500 BTC get filled, for example, every few minutes on some of the major exchanges.
These are whales in today’s bitcoin market – but they’re nothing compared to the whales we’ll see when a bitcoin ETF is approved.
“We’ve all noticed those transactions where someone just filled in an order of 1.500 BTC. That ‘whale’ is nothing compared to the whales that will enter the market when ETF is approved. And we’re not even considering institutions. Forget institutions. We are talking about people who are just like you and me, with the same emotions, the same tendency to speculate, but who simply have a few hundred million dollars more. Perhaps even a few billion. And they will play the same games we do, but with higher stakes. A 1.500 BTC transaction will seem low in a few years and that will have nothing to do with BTC’s price and all to do with the players who entered the game.”
Step 5) We’re Officially in a Bull Market
After the whales enter the market, including billionaires and institutional investors, we’ll officially be in the swing of the bull market. The market will be surging across the board. Investors will be excitedly talking about the next crypto ETF. If we had a bitcoin ETF, for example, then why can’t we have an Ethereum ETF?
Step 6) Market Cap Will Rise
The bull market could easily push bitcoin to a $1 trillion market cap. The price of bitcoin, however, needs to surge 10 times to achieve that mark. Will the bitcoin ETF approval bull market really be that powerful?
Trading Room answers that question by discussing bitcoin’s current market cap. Today, bitcoin is priced at around $6100 and we have a market cap of around $100 billion. That means there are about 17 million bitcoin. This total supply doesn’t take into account things like lost bitcoin (there are 4 million lost bitcoins) or locked or permanently frozen accounts (20 to 30% of bitcoin’s remaining supply).
That leaves us with an estimated 10 million bitcoin in circulating supply. Here’s where Trading Room does some quick math:
“Over the course of twelve to eighteen months the price of BTC will have shot up due to high demand. How high? We refrain from spewing jargon, going too deep into the mathematics and the research, but we need to consider the following: even if the entire stock of 10 million BTC is absorbed at an average of 40.000 dollars per BTC, only a push of about 250–300 billion is required to get to a trillion-dollar market cap.”
That surge will come from whales, including some of the 36 million millionaires in the world.
Step 7) Trillion Dollar Market Cap Achieved
Eventually, bitcoin will rise in price and we’ll achieve a $1 trillion market cap.
That $1 trillion market cap, according to Trading Room’s math, will be achieved when the price of one bitcoin is at least $58,000.
Step 8) Altcoins Receive ETF Approval
If we have a bitcoin ETF, then why can’t we have an Ether ETF or a Monero ETF? Why can’t we have an ETF based on the top 10 cryptocurrencies by market cap (the HOLD10 ETF has already been proposed for precisely this reason).
Altcoin markets could surge with similar bull runs in the months or years following bitcoin ETF approval.
Ultimately, it’s no secret that a bitcoin ETF would spark an enormous bull run in the bitcoin world. However, one of the most important facts to get from Trading Room’s piece is that bitcoin ETF rejection isn’t a bad thing: it just allows institutional investors to get bitcoin at a lower price. The further low the price of bitcoin goes, the more investors have to gain when a bitcoin ETF gets approved.
Stay tuned. It’s going to be an interesting next 12 months in the bitcoin world.