A long time ago, Bitcoin has been subjected to much criticism, unnecessary skepticism and scrutiny. From its use in illegal transactions to energy issues and price volatility, the king coin has seen it all over the past decade. However, the cryptocurrency’s rise from a market cap of $ 1 million in 2011 to nearly $ 1.1 trillion this year has placed it at number 7 on the list of the world’s largest assets.
Despite all the FUDs and criticism, the fact remains that Bitcoin managed to hit $ 1 trillion twice as fast as Amazon and Google and three times faster than Apple. Ergo the question – can BTC become more valuable than any listed company?
Bitcoin’s next big milestone
While there have long been arguments that Bitcoin is gaining ground over gold, with BTC’s current valuation (equivalent to a large-cap stock), a more realistic milestone would be more valuable than any publicly traded company. That may sound far-fetched at the moment, but it is more plausible than anyone can expect.
Ideally, if the goal is to be bigger than any publicly traded company, Bitcoin should overtake Apple, the leading company by market cap. Currently, Apple’s market cap is around $ 2.48 trillion, more than double the market cap of Bitcoin. Recently, Ecoinometrics did the hypothesis that Bitcoin could take over Apple. But how would that happen?
Bitcoin takes over stocks?
If we look at Apple as a moving target and assume it is moving at a constant rate, then its market cap has grown at an annualized rate of 22% over the past 5 years. The hypothesis assumes that this will continue over the next five years.
If Bitcoin continues to grow at the same annualized rate over the next 5 years, it will be 118% annualized. With 25% slower growth, the annual growth is 89%, and with 50% slower growth, 59%.
Given that Apple’s market cap is only about three times BTCs, at the current rate of growth, Bitcoin would turn Apple around sometime in 2023. If you keep an eye on the declining returns on BTC even at half speed, the same thing would happen in 2026.
Higher returns, but is it worth the risk?
Despite falling returns, Bitcoin and cryptocurrencies generally offer more ROIs than stocks. The only reason they can be frowned upon is the high risk factor associated with them.
To put this in perspective, APPL’s 2020 annual return on investment was around 26.28%. The same for Bitcoin was over 300%. However, the volatility roller coaster Bitcoin goes through is much worse than Apple’s. And this is where APPL wins as a traditional investment option.
This, coupled with the general dilemma new entrants in the crypto-verse face of when to enter the market, makes it a lot riskier. Unlike stocks, Bitcoin won’t rise over time, at least in low time frames. His appreciation is viewed from a long-term perspective. Not in days or weeks, but in months and years.
If an investor had bought BTC for around $ 60,000 this April, they would actually be at a loss now.
While Bitcoin may flip top stocks in the years to come, its price volatility remains a blessing to some and a curse to others.