Key Points
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Bitcoin has grown at a CAGR of 36% over the past decade.
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Going forward, Bitcoin’s growth rate is likely to slow down as it begins to perform more like a Nasdaq tech stock.
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Assuming a new CAGR of 18%, Bitcoin will hit a price of $1 million by 2040.
- 10 stocks we like better than Bitcoin ›
The $1 million price target for Bitcoin (CRYPTO: BTC) is suddenly back on the table. At the beginning of the year, it looked like Bitcoin might dip all the way to $50,000.
But Bitcoin has regained the $80,000 price level. As a result, a growing number of top investors now think Bitcoin is once again on a trajectory to $1 million.
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But when, exactly, will Bitcoin hit the $1 million price level? If it can hit $1 million by 2030, as many originally predicted, that’s a big deal.
But what if it takes Bitcoin a decade or longer to reach that vaunted level?
Bitcoin’s growth rate
It might sound obvious, but the time it takes Bitcoin to hit $1 million is dependent on one primary factor: how fast it can grow over time. The one number that I’m focused on right now is the compound annual growth rate (CAGR), which calculates the mean annual growth rate of an investment over a specific period of time.
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In order to hit a price of $1 million by 2030, as originally predicted by Cathie Wood of Ark Invest, Bitcoin would need to grow at a CAGR of 65% over the next five years. From my perspective, that rate of growth is simply no longer sustainable for Bitcoin.
After all, over the past decade, Bitcoin grew at a CAGR of approximately 36%. Expecting Bitcoin to grow faster than this over the next five, 10, or 15 years is overly optimistic.
In fact, I’m scaling back my growth estimate for Bitcoin to just 18%, or one-half of its CAGR over the previous decade. That’s roughly equivalent to the long-run CAGR of a Nasdaq-100 tech stock. It implies rapid growth, but not the type of hyperballistic growth Bitcoin experienced over the past decade.
Interestingly, the returns of Bitcoin and the Nasdaq-100 have become increasingly correlated. In other words, as the Nasdaq goes, so goes Bitcoin. Maybe investors need to start thinking about Bitcoin as just another high-beta tech stock, not as a unique portfolio diversifier.
A new timeline for $1 million
Assuming a steady growth rate of 18% for the foreseeable future, Bitcoin will hit a price of $1 million in 15 years. For the sake of argument, let’s call it 14 years. Bitcoin has been so good for so long that it deserves the benefit of the doubt.
As a result, I’m predicting that Bitcoin will hit a price of $1 million in the year 2040. There will be some zigs and zags along the way, but if Bitcoin can continue to grow as fast as a Nasdaq-100 tech stock, it should get there right on schedule.
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Dominic Basulto has positions in Bitcoin. The Motley Fool has positions in and recommends Bitcoin. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
