Popular on-chain analyst Willy Woo says Bitcoin (BTC) just needs a fraction of the capital stored in global wealth assets to reach a seven-figure price tag.
Woo tells his 1.1 million followers on the social media platform X that Bitcoin needs inflows of $5 trillion to move its price to $1 million.
According to the analyst, the figure equates to roughly 1% of global wealth assets.
He also notes that $620 billion has been invested in Bitcoin so far, and he outlines how he calculated the $5 trillion number.
“1) What’s the market cap need to be at $1 million? Assume that it’s happening soon so the circulating supply is 19.8 million coins so $19.8 trillion market cap.
2) What will the multiplier be between capital invested and market cap? This is a measure of the liquidity conditions, the deeper the liquidity, the lower the multiplier.
3) This metric is known, it’s called MVRV (market value to realized value) Ratio. It was 8x in the 2013 top, 4.8x in the 2017 top, 4.0 in the 2021 top. Based on this historic liquidity trend, we can expect the next top to be a 3.5x multiplier, if we hit $1 million in the cycle after this, then the multiplier will be even less given the trend in deeper liquidity making it harder to move price per dollar invested. So I’ll use 3.5x to be conservative on capital needed.
4) $19.8 trillion / 3.5 = $5.66 trillion needs to be stored in the network. This metric is called Realized Capitalization. Since the blockchain records every wallet with a time signature, we can estimate the price paid as it enters a wallet. Realized Cap needs to get to $5.66 trillion.
5) Since Realized Cap is only $620 billion today, we need it to climb a further $5 trillion to reach our target.”
The analyst says he doesn’t think BTC will reach that $1 million price target in the ongoing cycle due to the significant amount of capital required.
BTC is trading at $63,128 at time of writing, down over 1% on the day.
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Conor Devitt
https://dailyhodl.com/2024/08/27/bitcoin-needs-equivalent-of-1-of-global-wealth-assets-to-hit-1000000-according-to-analyst-willy-woo/
2024-08-27 09:15:13
