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Tags: Bitcoin

How the Bitcoin Market Cap Explains a $1 Million Price Prediction

By David Zeiler, Associate Editor, Money Morning • @DavidGZeiler • June 2, 2015

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The Bitcoin market cap plays a key role in making sense of Bitcoin value predictions of $10,000, $100,000 and even $1 million.

First, I must point out that, technically speaking, the "Bitcoin market cap" is something of a misnomer. It's what people have come to call the total value of all the bitcoins mined so far multiplied by the current Bitcoin price.

Bitcoin market capThe reason is that it mimics the market cap of a stock. But while the term is not quite accurate, the Bitcoin market cap is a convenient shorthand for describing what all the world's bitcoins are worth at a given point in time.

And it has become a tool for calculating future Bitcoin value.

As of today, the Bitcoin market cap is $3.2 billion. That's 14.22 million bitcoins times $225, the price of Bitcoin on Monday afternoon.

That $3.2 billion total doesn't seem like a lot of money for a technology that's expected to revolutionize the world of finance.

Other global currencies have very high values to facilitate all the transactions that must happen every day to keep the global economy functioning.

For instance, the M2 money supply of the U.S. dollar, the world's reserve currency, is just shy of $12 trillion. For the euro, it's 9.86 trillion euros, or $10.76 trillion.

The $3.2 billion Bitcoin market cap isn't even a lot in the industry of global transactions.

Just look at PayPal, a relatively small player in the transaction industry. It processes $60 billion worth of transactions every quarter. And credit card giant Visa Inc. (NYSE: V) processes $1.2 trillion every quarter.

But don't let these numbers fool you. The Bitcoin market cap will go higher...

The forces that today are driving millions of dollars in venture capital investment in Bitcoin will eventually start to drive the Bitcoin market cap to the levels needed for it to become a global financial tool. Just take a look at what's ahead for Bitcoin prices...

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David ZeilerDavid Zeiler

About the Author

Browse David's articles |

David Zeiler, Associate Editor for Money Morning at Money Map Press, has been a journalist for more than 35 years, including 18 spent at The Baltimore Sun. He has worked as a writer, editor, and page designer at different times in his career. He's interviewed a number of well-known personalities - ranging from punk rock icon Joey Ramone to Apple Inc. co-founder Steve Wozniak.

Over the course of his journalistic career, Dave has covered many diverse subjects. Since arriving at Money Morning in 2011, he has focused primarily on technology. He's an expert on both Apple and cryptocurrencies. He started writing about Apple for The Sun in the mid-1990s, and had an Apple blog on The Sun's web site from 2007-2009. Dave's been writing about Bitcoin since 2011 - long before most people had even heard of it. He even mined it for a short time.

Dave has a BA in English and Mass Communications from Loyola University Maryland.

… Read full bio

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Burt Wagner
Burt Wagner
8 years ago

It can/will go higher, but not that high. You forget that the average worldwide power consumption of the Bitcoin network is proportional to price. At a price of $1,000,000 per Bitcoin the Bitcoin network would try to consume a huge chunk of all the power produced on the planet.

My original calculation that shows this is here: https://bitcointalk.org/index.php?topic=520977.msg7687843#msg7687843

0
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Jameson
Jameson
8 years ago
Reply to  Burt Wagner

Decentralization will make it happen. All electronic devices will mine eventually. The electric use will be as distributed as the network.

0
Reply
lakawak
lakawak
8 years ago

IT is simple supply and demand. And demand is NOT there.

I have seen a lot of pump and dump attempts with bitcoin articles. But this one is the most blatant.

0
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David Zeiler
David Zeiler
8 years ago
Reply to  lakawak

Hardly a "pump-and-dump." The time frame for the rise in Bitcoin price is 10-20 years. Demand isn't there now, but will be. Try not to be so cynical.

-Dave Zeiler

0
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lakawak
lakawak
8 years ago

I like to draw kitties. I used to draw kitties every week. But lately, I have only been drawing one kitty picture a month. And soon, I will only draw 2-3 a year. I guess that means my kitty drawings will be worth MILLIONS soon…since supply will decrease.

0
Reply
mcderp
mcderp
8 years ago
Reply to  lakawak

If your kitty drawings became a widely accepted mode of payment, then yes, your kitty drawings can be worth millions.

0
Reply
dmoney
dmoney
8 years ago

Bitcoin 35000$ 2018

0
Reply
tarik
tarik
8 years ago

btc fin 2016 sera de 950 dollar

0
Reply


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