Here Is Why the Winklevoss Twins Expect a 25x Gain From Here for Bitcoin Over the Decade
Their reasoning is pure logic.
|Sylvain Saurel||Dec 8, 2020|
Bitcoin has been the best performing asset of the past decade. Bitcoin allowed to transform $1 invested at the beginning of 2010 into $90K at the end of 2019. Such a performance over a decade for an asset is unprecedented in the history of investment.
At the time of writing, the Bitcoin price is around $19.2K. Last week, the Bitcoin price broke its ATH on most exchanges. I'm waiting for the psychological barrier of $20K to be crossed before talking about a new ATH.
This will enable everyone to agree, but above all to launch the next Bull Run, so eagerly awaited by all those involved in the Bitcoin world.
Some retail investors find the current price of Bitcoin too expensive
Many individuals are now hesitating to buy Bitcoin. These people believe that Bitcoin's upside potential over the next decade is limited. They find the price of Bitcoin at $20K too expensive.
The first thing they need to understand is that even at $20K, Bitcoin remains the most undervalued asset in the world. Bitcoin is incredibly valuable to millions of people, and the number of people wanting to buy Bitcoin will continue to grow in the years to come.
Indeed, Bitcoin meets the great need that is emerging for the future for millions of people: to protect their wealth over time from the effects of monetary inflation in a way that is resistant to censorship.
The demand for Bitcoin will explode. While the demand for Bitcoin will explode, its supply will remain hard-capped at 21 million units. There will never be more than 21 million Bitcoins that can be put into circulation. By buying Bitcoin in 2020, you can be sure that the rules of the game will not change.
Unlike Bitcoin, fiat currencies are constantly being debased
This is the exact opposite of what is happening with the current monetary and financial system where the circulating money supply of fiat currencies is constantly increasing.
In 2020, the M2 Money Stock reached $19T. 20% of all U.S. dollars currently in circulation were printed in 2020.
Facing this great monetary inflation, Bitcoin is your best hedge.
Bitcoiners have been explaining this for years, but it is only in 2020, in the face of an economic crisis of a magnitude that has been not seen for decades, that a growing number of institutional investors are finally opening their eyes.
Early Bitcoin investors and founders of crypto-exchange Gemini, Tyler and Cameron Winklevoss bet heavily on Bitcoin. They now officially own more than 150,000 BTC. At the current price of Bitcoin, which is $19K, their fortune in Bitcoin is worth $2.85 billion.
Winklevoss Twins see a 25x gain from here for Bitcoin over the decade
The Winklevoss twins' thesis is simple. For them, Bitcoin is gold 2.0 that will eventually disrupt gold:
“Our thesis is that Bitcoin is gold 2.0 and it will disrupt gold.”
Based on this observation, the Winklevoss twins believe that Bitcoin will reach the gold market cap in the next decade. The gold market cap is currently $9T.
The advantage of Bitcoin is that its monetary policy is programmatic. Everything is predictable. We can therefore estimate fairly accurately the number of Bitcoins that will be in circulation in 2030. This number will then be 20 million BTC.
If Bitcoin has a market cap of $9T in 2030, the price of Bitcoin will be $450K.
Over the next decade, the great monetary inflation we are currently experiencing will continue to intensify. Under these conditions, the U.S. dollar will continue to weaken, which will boost the price of gold, but also the Bitcoin price.
Under these conditions, the Bitcoin price could be closer to $500K than $450K with a market cap similar to that of gold in 2020.
The reasoning of the Winklevoss twins is strong
The reasoning of the Winklevoss twins is the same reasoning that many Bitcoiners do as well. It is based on three major elements:
The law of supply and demand.
The gold market cap.
The endless inflation of the U.S. dollar.
From there, you can better understand why the Winklevoss twins said this during an interview for the show "Squawk Box" on CNBC:
“If Bitcoin does that it has to have a market cap of $9 trillion. So we think bitcoin could price one day at $500,000 a bitcoin. So at $18,000 bitcoin it’s a hold or if you don’t have any its a buy opportunity because we think there’s a 25x from here.”
With its current price of $19K, Bitcoin has enough to offer a 25x gain to all those who will choose to buy it before becoming HODLers.
Bitcoin is currently the investment with the best asymmetric returns potential
More and more institutional investors are betting on Bitcoin because they understand this. Individual investors will also follow in the coming months. Bitcoin is the best protection against monetary inflation, but it is above all the investment with the best asymmetric returns potential:
Cameron Winklevoss even said in the interview that he sees Bitcoin going even higher in the future:
“I think a lot of people are starting to realize that bitcoin is really the best defense and offers the opportunity for an asymmetric return of something like 25 to 40x from here. I don’t think there’s an asset in the universe that can credibly offer that kind of potential and protect against inflation.”
A return on investment of 40x with Bitcoin would bring us to a price in the order of $800K. This corresponds to what I often say when I explain that the Bitcoin price has the potential to reach the million-dollar mark within 20 years.
The upside potential of the Bitcoin price is immense just by disrupting gold
If this type of argument might have seemed fanciful to the general public only a few months ago, no one is dismissing these hypotheses anymore. After the Bull Run of 2021, which is expected to bring the Bitcoin price close to $100K, everyone will understand that Bitcoin's upside potential is still immense.
Those who criticize Bitcoin because it is not yet technically capable of being a generalized means of exchange for everyday life must understand that this will happen later.
Just by disrupting gold, Bitcoin has a great chance of reaching that $500K price by the end of the decade, as Cameron Winklevoss explained:
“Bitcoin doesn’t really need to be a great medium of exchange, it just needs to be better than gold and it’s better across the board. So bitcoin, the supply is fixed at 21 million. Gold is scarce. Bitcoin’s software it can be sent through the internet, like email, gold is hardware and its hard to transport.”
Bitcoin is a gold 2.0 that comes with an incredible number of advantages. Once Bitcoin is adopted en masse by the general public as a store of value, then it will be time to talk about the mass adoption of Bitcoin as a means of exchange for everyday life.
But by then, Bitcoin will have made further technical progress, as its community is among the best developers in the world. So, don't miss the opportunity to buy an asset that will still be the best performing of all over the next decade, while allowing you to live your life on your own terms.
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