Anthony Pompliano appeared on CNBC’s Fast Money on Thursday. The segment focused on the potential of bitcoin, especially compared to gold. During the interview he discussed in detail why he thinks bitcoin is currently drastically underestimated.
The road to $1 million
In his words, his thought process is more or less as follows:
The technology world is constantly looking for products that are 10 times better than incumbents
Bitcoin is easily a 10x improvement over gold, but probably 100x or more
If the market never gives Bitcoin the full honour of being 10x + better, Bitcoin will still reach USD 1 million per Bitcoin with only twice the market capitalisation of gold.
This will not be a straight line up from USD 40 000 to USD 1 million, but it is very likely that we will see the market capitalisation of Bitcoin overtaking the market capitalisation of gold over the next 10 years.
Growth on growth
Pompliano also admits that it can be somewhat shocking to say that the bitcoin rate could become USD 1 million. He explains:
Bitcoin is currently traded for about USD 40 000, so it would require BTC to grow 43% annually for 9 years to reach 1 million on the specified timeline. That seems insane for most assets, but remember that Bitcoin has had a compound annual growth rate of 235% over the last 8 years. So in reality, Bitcoin’s growth could slow down by more than 50% and still reach the $1 million mark by the end of this decade‘.
Gold investors switch to bitcoin
He also explains that this historic growth has taken place with almost no outflow of gold investors. Bitcoin was almost a net positive growth in the inflation hedge bucket. But that is beginning to change, more and more investors are dumping gold and going into bitcoin.
Pomp, as he calls himself, continues: ‚If more investors start to realise that the digital application of the principles of healthy money (Bitcoin) will be greater than the analogue application of the principles of healthy money (gold), acceptance among certain demographic groups could accelerate. Having said that, I find it difficult to see the compound annual growth rate accelerate by more than 235% or so over a period of several years‘.
As Bitcoin’s market capitalisation grows, more dollars will be needed to change the price in percentage terms. At the same time, Bitcoin becomes more useful as it gains more liquidity, and that liquidity is obtained through an ever-increasing market capitalisation. Essentially, it is much more likely that most people will realise that Bitcoin is already on track to reach USD 1 million by the beginning of 2030′.