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Ark Invest's "Wood Sister" fund announced a Bitcoin valuation model: starting at $500,000 per coin in 2030.
Original text: David Puell, Ark Invest analyst;
Translator: CryptoLeo
Editor's note:
At the beginning of the year, Bitcoin "diehard bulls" and Cathie Wood's Ark Invest released the Big Ideas 2025 report, mentioning three price targets that Bitcoin is expected to achieve by 2030: $300,000 (bear market), $710,000 (baseline market), and $1,500,000 (bull market). At that time, it was just "simply shouting" out a price far exceeding market expectations (like Plan B), without disclosing the actual estimation process.
Two months later, Ark Invest finally revealed its modeling methods and logical assumptions for its Bitcoin price target for 2030. The model predicts the price of Bitcoin in 2023 based on the total addressable market (TAM) for Bitcoin and its penetration rate.
Even more inspiring (exaggerated) is the fact that the price of Bitcoin in 2030 is $500,000 (bear), $1.2 million (benchmark), and $2.4 million (bull) based on the Bitcoin's active supply indicator, created by Ark Invest. If any of these TAMs or penetration rates do not meet expectations, Bitcoin may not be able to meet these price targets. So there are some risks and biases in this model. Here are the specific details of the Bitcoin price prediction, compiled by Odaily Planet Daily.
Price Targets and Assumptions
Our price target is the sum of the TAM (Total Addressable Market) contribution by the end of 2030, based on the following formula:
Odaily Planet Daily Note: This formula predicts the price of Bitcoin in 2030 by quantifying the dynamic relationship between market demand and Bitcoin circulation. The price of Bitcoin is derived by multiplying the maximum dollar benchmark demand scale of the segmented market by the penetration rate of Bitcoin in its market and dividing by the circulating supply of Bitcoin, and summing the prices of all segmented markets (the following segmented markets/concepts) to arrive at the predicted price of Bitcoin in 2030.
Our estimate of supply is based on the circulation of Bitcoin, with nearly 20.5 million BTC expected to be mined by 2030. The contribution of each variable to the price target is as follows:
Expected contributors to capital accumulation (mainly):
Institutional investment, mainly through spot ETFs;
Bitcoin is referred to by some as "digital gold"; compared to gold, it is a more flexible and transparent means of storing value.
Emerging market investors are seeking safe havens that can protect them from the impacts of inflation and currency devaluation.
Expected capital accumulation contributors (secondary):
National treasury reserves, other countries follow the United States in establishing strategic reserves of Bitcoin;
Corporate treasury reserves, as more and more companies utilize Bitcoin to diversify their fiat cash holdings;
Bitcoin on-chain financial services, Bitcoin as an alternative to traditional finance.
Excluding digital gold (as it is Bitcoin's most direct zero-sum competitor, our model excludes it), we conservatively assume that the TAM of the aforementioned contributors (specifically 1, 3, 4, and 5) will grow at a compound annual growth rate (CAGR) of 3% over the next six years. For the sixth contributor—on-chain financial services of Bitcoin—we assume its CAGR over six years will be between 20% and 60%, based on the cumulative value as of the end of 2024, as follows:
Odaily Planet Daily Note: This formula calculates the Bitcoin TAM six years later by taking the total value of Bitcoin in 2024 and its compound annual growth rate, and then divides it by the circulating supply of Bitcoin in 2030 to determine its price.
Finally, we describe the contributions of TAM and penetration rate to the price targets in bear markets, benchmark markets, and bull markets, as follows:
As shown in the figure above, "digital gold" contributes the most to our bear market scenario and baseline scenario, while institutional investment contributes the most to our bull market scenario. Interestingly, contributions from national treasuries, corporate treasuries, and on-chain bitcoin financial services are relatively small in each scenario. In the table below, we detail the relative contributions of our predicted six sources of capital accumulation to the bear market, baseline market, and bull market situations:
Odaily Planet Daily Note: The following charts respectively represent the expected TAM for segmented markets in 2030, the Bitcoin penetration rate under three market conditions, and the contribution ratio shown in the above chart.
According to State Street Bank, the definition of a global market portfolio is as follows:
The market value of all investable capital assets divided by the total market value of all assets. As the sum of all positions resulting from collective decisions made by investors, issuers, as well as capital suppliers and demanders, the global market portfolio can be seen as the actual representation of all investable opportunities available to global investors.
As of 2024, the TAM of the global investment portfolio is approximately $169 trillion (excluding the 3.6% share of gold). Assuming an annual compound growth rate of 3%, its value will reach approximately $200 trillion by 2030.
We assume that the penetration rates for the bear market and the benchmark market are 1% and 2.5% respectively, both lower than gold's current share of 3.6%. Therefore, the bear market and benchmark market represent a conservative view of Bitcoin adoption. In a more aggressive bull market, we assume that Bitcoin's penetration rate reaches 6.5%, nearly twice that of gold's current share.
The contribution of digital gold assumes the ratio of TAM to the current market value of gold. Given the positive penetration rate provided, we assume that the expected TAM for gold will not grow by 2030, thereby reducing its expected value. We believe that Bitcoin as digital gold is an attractive narrative that will drive its penetration rate.
Emerging market safe haven TAM is based on the monetary base of all developing countries (defined by IMF/CIA, also known as "undeveloped" economies). We believe this use case of Bitcoin has the greatest potential for capital appreciation. In addition to its value storage characteristics, the low barrier to entry for Bitcoin provides an investment option for individuals with internet access, which may bring capital appreciation over time, unlike defensive allocations such as the US dollar—thus preserving purchasing power and avoiding depreciation of the local currency.
Odaily Planet Daily notes: "M2" is an indicator that measures the money supply in the United States, which includes M1 (currency and deposits held by the non-bank public, checkable deposits, and traveler's checks) plus savings deposits (including money market deposit accounts), small time deposits under $100,000, and retail money market mutual fund shares.
Although El Salvador and Bhutan currently lead the world in national-level Bitcoin adoption, the number of advocates for Bitcoin strategic reserves is increasing—especially after Trump's administration, when he issued an executive order on March 6 demanding the establishment of BTC reserves in the United States. Despite our relatively conservative bear market assumption and benchmark assumption, we believe that the situation in the U.S. may further validate the 7% penetration rate in our bull market assumption.
Inspired by the successful acquisition of Bitcoin by MicroStrategy since 2020, other companies have also begun to incorporate Bitcoin into their corporate treasury reserves. By the end of 2024, 74 publicly traded companies are expected to hold approximately $55 billion in Bitcoin on their balance sheets. If these companies' BTC strategies prove successful over the next six years, our conservative penetration rate assumptions in bear and baseline scenarios (1% and 2.5%, respectively) may eventually approach the 10% assumption under a bull market.
The native financial services of Bitcoin are becoming an emerging contributor to capital accumulation. Notable examples include Layer 2 services like the Lightning Network, which are dedicated to expanding Bitcoin's transaction capacity, while Wrapped BTC (WBTC) on the Ethereum network allows Bitcoin to participate in decentralized finance. Such on-chain financial services are becoming an increasingly important feature of the Bitcoin ecosystem. Therefore, we believe that a benchmark market compound annual growth rate of 40% from now until 2030 is based on expected realistic conditions.
The hypothesis of ARK applies to the active Bitcoin supply.
Although not included in ARK's Big Ideas 2025 report, other experimental modeling methods have estimated the price of Bitcoin in 2030. One such method is by calculating the Bitcoin that is lost or held for the long term, using the on-chain transparency of Bitcoin to estimate the liquidity supply of Bitcoin—which we refer to as the "active" supply.
According to this method, the active supply can be calculated by multiplying the expected supply of Bitcoin in 2030 by the "activity" metric, which measures the movement of Bitcoin over time from 0% to 100%—in other words, the asset's true "floating," as shown below.
As shown in the figure, since the beginning of 2018, the network activity of Bitcoin has remained around 60%. We believe that this level of activity indicates that about 40% of the supply is "vaulted" (i.e., Bitcoin that is stored and does not enter the market, such as Satoshi Nakamoto's Bitcoin address) — we delve into this concept in our ARK white paper "Cointime Economics: A New Framework for On-Chain Analysis of Bitcoin" ().
Then, we apply the same bear market and benchmark market's TAM and penetration rate to the scenario where the active supply is expected to reach 60% by 2030 (assuming that the level of activity remains stable over time), as follows:
Based on this, we derive the following price target, which is about 40% higher than our baseline model that does not take into account Bitcoin's active supply and network activity:
The model shows that the estimated price of BTC in 2030, based on the new joining activity indicators, is: $500,000 (bear market), $1,200,000 (baseline market), and $2,400,000 (bull market).
Importantly, valuations constructed with this more experimental approach are more aggressive than our valuations under bear, benchmark, and bull scenarios. Since our official price target is more conservative, we only focus on the total supply of Bitcoin. Even so, we believe that this more experimental approach highlights that Bitcoin's scarcity and loss of supply are not reflected in most valuation models today.
Epilogue
I took a brief look at the Cointime Economics framework, which proposes a new system for analyzing Bitcoin valuation and inflation rates. It calculates the economic state and supply activity of Bitcoin through its Liveliness and Vaultedness, which can measure the transactional activity level in the Bitcoin network and the ratio of unused coins. Using these two indicators, Bitcoin's supply can be classified into active supply and unused supply.
The framework also proposes a unit of measurement - "Coinblock", the concept of "Coinblock" provides a new set of on-chain analysis indicators to measure the activity of Bitcoin, by calculating the product of the holding time and the number of bitcoins to obtain the number of blocks, and also introduces the three concepts of "block creation", "block destruction" and "block storage", and builds a series of new economic indicators based on this, such as the activity and locking degree of Bitcoin, etc., to measure the dynamic changes and economic state of the Bitcoin market. In addition, the content showcases the potential of Cointime Economics to improve market valuation models, measure supply activity, and create new models through case studies. The coin block concept and the Cointime economic framework may become the main reference for Bitcoin valuation in the future. If you are interested, you can take a look at the original PDF().