(Kitco News) The popular cryptocurrency is known for its volatility, so don’t be surprised to see prices surge to $1 million this decade as bitcoin becomes more scarce than gold and big pension funds start piling in, according to Fred Pye, president and CEO at 3iQ.
“Bitcoin already is the most successful investment ever in the history of the world. Nothing has gone from zero to a $1 trillion in ten years,” Pye told Kitco News, referencing bitcoin’s market cap.
When asked to compare bitcoin and ethereum to commodities, Pye described bitcoin as gold and ethereum as Dr. Copper.
“Gold is a store of wealth. The scarcity of gold and bitcoin is equal right now, but two years from now, bitcoin will be twice as scarce as gold,” he said.
On the other hand, the second-largest cryptocurrency ethereum behaves more like Dr. Copper because it represents the overall health of the digital economy, just like copper is known to predict turning points in the health of the global economy.
“The ethereum blockchain is like Dr. Copper. If copper is going up, the health of the overall economy is doing very well. Likewise, if ethereum is going up, the overall health of the digital economy is going up,” he added.
Bitcoin’s finite supply and the halving process are what make massive price surges possible. Bitcoin halving happens every four years and it is when the reward for mining bitcoin transactions gets halved, which also cuts the rate at which new bitcoins enter circulation. The last bitcoin halving was in May 2020.
Looking at past and future halvings, bitcoin will reach $100,000 in the next two years and then hit $1 million four years after that, Pye pointed out.
“Bitcoin’s supply is being cut in half every four years. We have seen the price of bitcoin go up 10X every time it got cut in half. So went from a $100 to a $1,000, a $1,000 to $10,000. Right now, we’re on our way from 10,000 to $100,000. Four years after that, meaning six years from now, we expect to go from $100,000 to $1 million potentially. And then after that, we’d go from $1 million to $10 million if the properties of scarcity play out the right way.”
When discussing the recent wave of volatility in the crypto space, Pye said that a massive selloff like May’s 50% retracement is “perfectly normal” for a new asset.
At the end of May, bitcoin tumbled from its all-time highs of $64,895.22 hit back in April to near $32,000. “Bitcoin went from $1,000 to $20,000 and then back down to $3,000 and then to $60,000. And now it’s in the mid-$30,000-$40,000,” he said.
What started the snowball effect was China once again trying to ban the use of bitcoin transactions as well as mining. “And it’s really concerning for a country such as China because everyone knows that China has currency controls. And now you’ve got this trillion-dollar asset that you can’t control, which is why we love it,” Pye said.
But China’s policy does not impact the overall investment case for bitcoin, noted…