In a interview with Yahoo Finance’s ‘Wealth’, Ric Edelman, founder of the Digital Assets Council of Financial Professionals and $291 billion asset manager Edelman Financial Services, gave a striking prediction for the Bitcoin price. Edelman argued that Bitcoin’s price could rise to $420,000, attributing this potential increase to a modest global asset allocation to Bitcoin.
Why Bitcoin Price Will Reach $420,000
During the interview, Edelman delved into the benefits of investing in Spot Bitcoin ETFs. He noted that these instruments make Bitcoin accessible in the same way as traditional ETFs, which are common and familiar to investors using regular investment accounts.
“They’re incredibly cheap, 20-25 basis points cheaper than Coinbase or any other crypto exchange, and if you’re in a brokerage account you can rebalance, you can calculate dollar cost averages, you can tax the losses,” Edelman pointed out. This setup simplifies the investment process, making it similar to managing any other asset class, thus broadening its appeal to a wider audience.
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However, Edelman was also candid about the challenges and risks associated with Bitcoin. Despite the benefits that ETFs offer, Bitcoin’s inherent nature as a volatile and risky investment remains. “It’s still Bitcoin, which means it’s still very volatile, and still very risky. You can still lose everything,” he warned.
Edelman pointed to continued regulatory uncertainty, potential lawsuits and prevalent fraud as significant risks that investors must manage cautiously. He also criticized the trend of investing due to the fear of missing out (FOMO), labeling it as a poor investment rationale.
Looking ahead, Edelman discussed the regulatory landscape, especially as it relates to other cryptocurrencies such as Ethereum. He noted that there are several pending applications for Ethereum ETFs, and while he expects initial rejections, approvals could come by the end of the year.
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“After you have the Bitcoin ETFs and the Ethereum ETFs, I’m not sure how soon you’ll see anything else after that, but these two will open the doors in the longer term. In five years there will be dozens, maybe even hundreds of crypto ETFs,” Edelman speculated. This perspective underlines a significant shift towards mainstream adoption and integration of cryptocurrencies into traditional financial products.
Edelman’s prediction that Bitcoin will reach $420,000 is based on an assumption of global asset diversification. According to his calculations, if all global asset holders allocated just 1% of their assets to Bitcoin, this would translate into a market cap of $7.4 trillion for Bitcoin alone.
“It’s remarkably simple. If you look at the global assets of the world, the value of the stock market, the bond market, the real estate market, the gold market, look at all the assets that everyone in the world owns, it’s about $740 trillion. ,” he explained. Such an allocation would dramatically increase Bitcoin’s market cap, causing its price to rise significantly.
Additionally, Edelman highlighted a shift in the perception of Bitcoin from a transactional currency to a store of value, similar to gold. “Bitcoin’s use case, while strong for transmission, is not the strongest argument. It is now like gold, a store of value,” he said. This perception shift has attracted more institutional investors, who view Bitcoin as a hedge or alternative asset class, similar to other non-traditional investments such as works of art or collectibles.
At the time of writing, BTC was trading at $61,909.
Featured image of Wealth Management, chart from TradingView.com