Could Investing $1,000 in Bitcoin Make You a Millionaire?

There are currently over 85,400 Bitcoin (BTC -0.54%) millionaires in the world, according to the latest Crypto Wealth Report from Henley & Partners. That’s way more than for any other cryptocurrency and tells you everything you need to know about Bitcoin’s performance over the past decade. For seven of the past 10 years, Bitcoin has been the world’s best-performing asset, and it hasn’t even been close.

That stellar performance turned Bitcoin from a tiny $100 cryptocurrency in 2013 to the $60,000 behemoth it is today. If you bought Bitcoin early and then held on during its many market downturns, there is a high probability that you will be a millionaire. But now? Could investing a similar amount of money in Bitcoin today make you a millionaire?

Millionaire math

Let’s start with some millionaire math. For argument’s sake, let’s say you have $1,000 to invest today and you plan to invest all of it in Bitcoin. To turn that $1,000 into $1 million, you should see a 1,000x return on your investment.

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How realistic is it? Some of the most optimistic price predictions call for Bitcoin to reach a price of $1 million by 2030. Given Bitcoin’s current price of $60,000, that would imply a 16x return on your investment. That’s an impressive figure, but nowhere near the 1,000x return you’d need. And it’s nowhere near the 600x return that Bitcoin has enjoyed over the past decade.

To achieve a 1,000x return, Bitcoin would need to reach a price of $60 million. Given Bitcoin’s maximum lifetime supply of 21 million coins, this implies a market cap of over $1 quadrillion! This number is easily larger than the total value of the global stock market ($100 trillion). And it’s even higher than the value of all the world’s wealth, which is estimated to be close to $600 trillion by 2027. Thus, a price target of $60 million is not very realistic given the relative size of current financial resources. markets.

Bitcoin Millionaire Scenario

But all is not lost if you are determined to become a Bitcoin millionaire. Many smart people actually believe that Bitcoin could be approaching the $60 million price target.

In July, for example, Michael Saylor of MicroStrategy Inc. (MSTR 5.43%) predicted that Bitcoin would reach $13 million by 2045. This was his baseline scenario. His bull scenario calls for Bitcoin to reach $49 million. And if you spend just a few minutes on YouTube, it’s pretty easy to find investors predicting a future price of $100 million or more for Bitcoin.

What all these outlandish price predictions have in common is a fundamental belief that Bitcoin will one day replace the US dollar as the global reserve currency. Given a long enough period, it is believed that the modern financial system will eventually abandon the dollar and embrace Bitcoin.

Under this scenario, the ever-growing mountain of debt in the United States ($35 trillion) will collapse one day. At some point, it will no longer be possible to print more money to cover this debt. Thus, a collapse of the dollar will occur and dollar-denominated assets will decrease in value. As a result, the world will have to find a new backup currency and this is where Bitcoin comes into the picture. Just as the world once ran on a gold standard, the world will one day run on a Bitcoin standard.

Is Bitcoin Still The Best Millionaire Maker?

Be careful what you wish for. If you’re hoping to become a Bitcoin millionaire with a modest investment of $1,000, then about the only way it could happen is if the entire financial system collapses and Bitcoin takes over.

That said, I’m still bullish on Bitcoin long-term and believe it will continue to grow in value over the next decade. But I also recognize that someone is far more likely to become a millionaire investing in a cryptocurrency other than Bitcoin.

The key is to find a cryptocurrency that closely resembles Bitcoin in 2010, when someone was willing to pay 10,000 Bitcoins for two pizzas. If you manage to buy this cryptocurrency when it’s still trading at a very low price and then hang on for years as it appreciates in value quickly, then you might wake up to a very nice nest egg one day.