This article is also available in Spanish.
Over the past seven months, the price of bitcoin has moved in a range between $73,777 and $49,000, significantly depressing sentiment across the market. In a new analysis published via x, Will Clemente III, co-founder of Reflexivity Research, x.com/WClementeIII/status/1831155107376812380″ target=”_blank” rel=”nofollow”>addresses the prevailing sentiment of impatience and uncertainty among investors, and explains why he remains optimistic.
Clemente’s optimism is based on a long-term outlook for the next decade. Drawing on his experience in portfolio construction and asset allocation, Clemente emphasized the importance of identifying major economic trends that are likely to develop over the next decade. “I’ve been thinking a lot about portfolio construction and position sizing lately. I still think there’s nothing I’d rather hold in a coma for 10 years than bitcoin,” Clemente stated, emphasizing his confidence in bitcoin as the superior asset over the long term.
His analysis is based on anticipating certain macroeconomic trends. Clemente suggests that investors should consider what the most important trends will be in the next decade and adjust their portfolio accordingly. This involves significantly increasing investment in the most confident trend or spreading investments across several promising trends based on their potential impact.
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Clemente, for his part, prefers to focus on the most likely trend, which he identifies as the continued growth of the US deficit and the consequent need for the government to devalue the currency to pay that debt. This scenario, according to Clemente, offers a more predictable outcome than other technological trends such as artificial intelligence or space exploration.
“Compared to other tech trends, debasement is pure math. Also, the way to bet on other tech trends, for example ai or space, is not as clear as debasement, since there is no way to position yourself for it as clear as bitcoin,” writes Clemente.
How high can bitcoin go in 10 years?
Clemente’s bullish stance on bitcoin is reinforced by his analysis of potential capital inflows from sovereign wealth funds and pension funds. He estimates that if these entities were to allocate just 1% of their capital to bitcoin, it would result in approximately $460 billion of new investment in btc, potentially doubling its market cap and pushing prices to between $150,000 and $200,000 per bitcoin.
Clemente further speculates on the impact of increased allocation, suggesting that if deficit concerns intensify, these institutions could allocate as much as 3%, which would translate to $1.4 trillion flowing into bitcoin. And the upside potential is even greater. “What if it eats into the $10-15 trillion of gold’s monetary premium? What about the combined monetary premium in Treasuries/stocks/real estate that is currently parked in these assets as SoV to hedge against currency debasement?” he mused.
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To conclude his analysis, Clemente concluded that a price of $1 million per bitcoin in 2034 is not out of the realm of possibility considering the reduced purchasing power of the dollar. “I would also like to add that this does not take into account that dollars will be worth significantly less in the future due to devaluation, so a price of $1 million worth of bitcoin in 2034 is not as far-fetched as a $1 million worth of bitcoin in 2024,” the analyst commented.
However, Clemente also acknowledged: “I think bitcoin’s days of 100%+ CAGR are over, but that doesn’t mean it won’t outperform equity indices by a lot, and on a sentiment-adjusted basis, I don’t see anything that attractive in the market today.”
At the time of writing, btc was trading at $56,481.
Featured image created with DALL.E, chart from TradingView.com
