₿ The Math Behind Bitcoin Hitting $1 Million

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• The Math Behind Bitcoin Hitting $1 Million ₿

• What To Watch This Week 👀

• Here’s How Wrong This Doomer Has Been… 💥

Today’s newsletter is a 5 minute read.

The Math Behind Bitcoin Hitting $1 Million ₿

Bitcoin analyst, Willy Woo recently posted this tweet exploring the math behind what it would take for bitcoin to get to $1M per coin…

So what exactly does that mean?

Here’s the TL;DR:

To reach $1 million per Bitcoin, we’re looking at needing around $5 trillion more in capital to flow into the network.

That’s roughly 1% of global wealth.

So far, only about $620 billion has been invested in Bitcoin, so there’s a long way to go.

Now, you might be thinking, “$5 trillion? That sounds insane!”…

But let’s break it down with Woo’s math.

1. Market Cap Target: First, to hit $1 million per coin with the current circulating supply of 19.8 million Bitcoins, the total market cap needs to reach $19.8 trillion.

2. Capital Multiplier: Not every dollar invested turns directly into a dollar of market cap; it’s more like a multiplier effect due to market liquidity. Woo uses the MVRV ratio (which measures market value to realized value) to estimate this. Historically, this ratio has been decreasing over time—8x in 2013, 4.8x in 2017, and 4.0x in 2021. For a $1 million Bitcoin, Woo conservatively estimates a 3.5x multiplier.

3. Realized Capitalization: With that 3.5x multiplier, the realized capitalization needs to hit around $5.66 trillion. Considering we’re currently at $620 billion, that’s an additional $5 trillion to go.

So, is this a feasible target? Woo himself suggests it’s unlikely to happen in this cycle due to the sheer amount of capital required.

It’s not just about new money flooding in—it’s about how quickly that capital can move into Bitcoin.

Liquidity matters, and the deeper the market gets, the more money is needed to push prices higher.

In other words, while $1 million per Bitcoin is a thrilling thought, it’s not happening overnight. It might take a few more cycles and a lot more global wealth pouring into crypto before we get there.

But hey, we’re not betting against Bitcoin—just don’t hold your breath for it to happen next week.

What To Watch This Week 👀

Federal Reserve chairman Jerome Powell gave the green light for risk assets at the Jackson Hole conference on Friday, saying that “the time has come for policy to adjust”.

Crypto and stocks rallied hard as the market priced in more certainty that interest rate cuts will begin next month.

This week the major roadblock for the market will be Nvidia’s earnings report on Wednesday afternoon.

Expectations are high as always, but if Nvidia can avoid a major disappointment, then the market could see the recent rally continue.

Economically sensitive stocks such as homebuilders, REITs, and small caps saw the most benefit last week so we will watch for continuation of that trend this week.

Retail stocks will also be in focus as companies such as Lululemon, Chewy, and Ulta report earnings:

The macro calendar is relatively light, though there are a few notable inflation readings:

• US durable goods orders (Mon)

• Australia inflation (Tues)

• Germany consumer confidence (Wed)

• Germany inflation (Thurs)

• US Q2 GDP estimate (Thurs)

• Japan consumer confidence (Fri)

• US personal income & spending + core PCE (Fri)

• EU inflation (Fri)

The Japanese Yen has been quietly strengthening against the US dollar so we’ll need to watch out for any brisk moves in currency markets this week.

Bitcoin is also back above its key moving averages so keep an eye there for potential breakout price action.

In addition we’ll be keeping close watch on the following assets & sectors:

📈 Rising Recently:

• Small Caps (IWM)

• Crypto (BTC / ETH / WGMI)

• Homebuilders (XHB)

• REITs (XLRE)

• Financials (KBE / KRE)

• Airlines (JETS)

• Gold & Gold Miners (GLD / GDX / GDXJ)

• Retail (XRT)

• Health Care (XLV)

📉 Falling Recently:

• Energy (XLE)

Here’s How Wrong This Doomer Has Been… 💥

Robert Kiyosaki does it again: he was terribly wrong on predicting catastrophic market and economic events.

Let’s take a look at how things have panned out since his tweet on March 8th, 2022

Asset Bubbles Popping:

No doubt, assets have become expensive.

We’ve even written before about the stock market measured by the S&P 500 being on the pricey side when it comes to valuations (however, it appears if 2025 earnings expectations come to fruition, it may grow into its valuation a bit more).

If you would have listened to the doomers, you would have missed out on quite a bit of return.

The S&P 500 is up 35% since Kiyosaki’s tweet (40% with dividends reinvested).

Real estate values were even expected to go down as interest rates started rising. However, no pop of the “bubble” came. Housing prices have held up just fine and aren’t expected to drop much when rates coming back down soon.

Existing home sales have risen, and new home sale prices are just slightly lower since Kiyosaki tweeted this.

Depression:

I think it’s been so long since the Great Depression, people have forgotten how BAD a depression really is.

We can’t even find a technical recession (as measured by NBER) within the data that we have.

The labor market is weakening, however, the unemployment rate is no where near “depression” levels.

Consumer spending also continues to hold up as even corporations like Target ($TGT) who saw the first shoe to drop with discretionary spending, says consumers are finally spending again.

If the Fed moves on a September rate cut, they may pull off avoiding a technical recession… and we’re certainly no where near a depression.

Hyper-Inflation:

We’ve seen the opposite of hyper-inflation: Disinflation.

The rate of inflation continues to fall. While we still don’t like seeing an inflation number over 2%, it’s been on the right trajectory lower.

So, needless to say, listening to Kiyosaki would have actually cost you wealth if you tried to get out of the market or sell your house because of his advice.

He couldn’t have been more wrong!

Food For Thought 🧠

"The illusion of control is more dangerous than no control at all.”
- Nassim Taleb

DISCLAIMER: We are not investment advisors, and this content is for educational purposes only. We don’t offer financial, legal, or tax advice. Nothing we say is a recommendation to buy or sell any assets. Trading and investing are extremely risky, so please be careful and do your own research.