Joe Burnett, Director of Market Research at Unchained, has presented a remarkable forecast for Bitcoin in his report "The Mustard Seed." He predicts that the price of Bitcoin could rise to as much as $10 million per coin by 2035. This prediction is based on two main factors: the "Great Flow of Capital" into Bitcoin due to its limited availability and the "Acceleration of Deflationary Technology" through AI and automation.
The "Great Flow of Capital" into Bitcoin
Bitcoin differs from other assets due to its fixed cap of 21 million coins. This absolute scarcity ensures that any increased demand directly translates into a price increase without the supply of coins being able to increase. In contrast, traditional assets like gold and real estate can increase their availability through new mining or construction projects, potentially leading to devaluation.
Burnett uses a waterfall analogy, originally from Michael Saylor: capital naturally flows into the state with the lowest potential energy, similar to how water flows downhill. Before Bitcoin, wealth had no way to protect itself from devaluation. With Bitcoin, this has changed, as it offers the first asset with unalterable and perfect scarcity.
The "Acceleration of Deflationary Technology"
Another crucial factor influencing Burnett's forecast is the accelerated development of deflationary technologies such as artificial intelligence (AI), automation, and robotics. These technologies significantly increase productivity and reduce costs across various industries. Examples include Adidas' "Speedfactories," which reduce production time from months to days, or 3D-printed houses that can be built 50 times faster and at lower costs.
Through these technologies, the price of goods and services could drastically decrease, thereby increasing the purchasing power of Bitcoin holders. Unlike current monetary systems, where deflation is often artificially suppressed through inflation and stimulus measures, Bitcoin would allow deflation to take its natural course and increase purchasing power.
Predicted Price Development
Current models, such as the Power Law model and the model developed by Michael Saylor, predict prices ranging from $1.8 to $2.1 million per Bitcoin by 2035. However, Burnett considers these estimates conservative, as they assume decreasing growth rates while technological adoption could actually accelerate.
Market Conditions and Absorption of New Supply
If Bitcoin were to reach $10 million per coin, it would imply a total market capitalization of approximately $200 trillion. This would represent about 11% of global assets, assuming global wealth grows annually by about 7%. Burnett argues that it is quite realistic for investors to allocate about 11% of their portfolios to Bitcoin, given it is the best long-term store of value.
A crucial point is the market's absorption of new supply. By 2035, the block subsidy for Bitcoin will decrease to 0.78125 BTC per block. At a price of $10 million per coin, miners would generate about $411 billion annually. Since miners sell the produced Bitcoins to cover their costs, the market would need to absorb about $411 billion in new supply each year.
Burnett draws a comparison with the global wine market, which was valued at approximately $385 billion in 2023 and is expected to rise to $528 billion by 2030. If a "mundane" segment like the wine market can sustain such demand, it is plausible that an asset with absolute scarcity like Bitcoin could reach similar scale levels.
Conclusion
Joe Burnett's prediction that Bitcoin could reach $10 million per coin by 2035 is based on the combination of Bitcoin's absolute scarcity and the accelerated development of deflationary technologies. Although this forecast seems ambitious, Burnett argues that it is realistic when considering the long-term structural changes in the global financial system. Bitcoin does not need to replace the entire monetary system to be successful; it merely needs to capture a significant portion of global wealth to become the dominant form of savings.
