At the time of writing this article, Bitcoin (BTC) price was $3,576.47, slightly down (0.35 percent) in the last 24 hours. An asset that was worth nearly $20,000 a year ago is now struggling to break the $4,000 barrier, causing concern among the investors’ community. The bears have dominated the market for months now, without clear signs of a short-term surge.
However, according to Lucid, which is a prominent asset management company, the price of Bitcoin does conduct some long-term allure, as it still holds the potential to reach an important sum even if the market is not quite favorable today.
The Global Debt Crisis Is the “Perfect Opportunity” for Bitcoin
In fact, Lucid observes that the current global debt crisis is a perfect opportunity for Bitcoin. The world’s most influential digital asset has had no shortage of supporters throughout its history: from John McAfee and its $1 million prediction to Fundstrat and its $25,000 target, BTC has received support. However, most of those remarks were made during bull runs. After the bears settled in, BTC has not inspired the same confidence as before.
Lucid, however, forecasts that the Bitcoin price can even reach $10 million one day, become the gold standard, and solve the planet’s debt crisis; quite the prediction in the midst of arguably the worst market collapse in BTC history, excluding the 2015 one.
The firm understands that the ratio of global debt to wealth went out of control, which has originated a “grotesque imbalance” of wealth inequality. As December 2018, the world debt was at roughly $247 trillion, compared to $317 trillion in total world wealth. It is notable that, while the latter is still surpassing the former, the gap is narrowing.
Assessing the World’s Needs
According to numbers provided by Lucid, the global debt has increased 394 % in the last 20 years, while the wealth has only gone up around 133%. Status quo, therefore, would not be sustainable, which would create a need for the world to come up with a solution to solve the debt problem.
Lucid names the five most likely solutions for this: create a new commodity/currency basket, mass Bitcoin investment, the adoption of a gold standard, economic growth, and outright default on sovereign debt. And while Lucid concedes that it may not be the most likely outcome, it categorizes Bitcoin as a permanent fix to the debt crisis.
The report was drafted by Dean Tyler Jenks and Leah Wald, which currently act as Lucid’s President/Chief Investment Officer and Executive Vice President, respectively. “Is this mass bitcoin adoption feasible? Probably not. But we believe it is possible and we believe it offers the greatest benefits with the least collateral damage to the least number of individuals, corporations, institutions, and countries. Most importantly, it would provide a permanent fix, a quality that none of the other solutions provide,” the text reads.
A Matter of Raw Numbers
If mass Bitcoin adoption is achieved, then naturally its price would experience an unprecedented surge. “Why $10 million? At that level, Bitcoin would provide a sufficient reserve to alleviate the world debt burden. Bitcoin would be worth between $180 trillion and $210 trillion (depending on when that price was reached). Assuming world debt had reached $500 trillion at that time, remember it has grown by 394% over the past 20 years; Bitcoin would represent a 40% reserve against the debt.
To reach $10 million, Bitcoin would have to increase by nearly 285,614.3 percent. The process may not be fast: in fact, Lucid forecasts that the current bear run is not over and that it the value may be lower than $1,000 for the process to start.
By Andres Chavez