Mike Novogratz, CEO of Galaxy Digital, has made a bold prediction: Bitcoin could reach $1 million. This projection isn't pulled from thin air. At the same time, bitcoin is increasingly being viewed as a digital gold. It’s proving to be a strong store of value in a world with growing economic uncertainty and quickly degrading fiat currencies. Bitcoin’s spectacular rise, propelled by seemingly unstoppable forces of institutional adoption and macroeconomic factors, is one for the legacies in the cryptoverse—an ever-evolving legend.

Novogratz’s prediction largely depends on Bitcoin gaining at least 10 percent of gold’s total market cap. As of now, gold’s estimated market cap is at $17.85 trillion, while Bitcoin’s market cap hovers just over $2.09 trillion. For Bitcoin to go to $1 million, it would have to significantly fill this gap. What the Bitcoin market requires is a huge shot of capital. This next wave will be driven by ongoing institutional adoption, accelerated retail investment, and Bitcoin’s maturing status as a safe-haven asset.

DreamingCrypto believes that this lofty goal is merely the opening act of the Web3 prophecy, ushering in a new age with visions of worlds unchained. Just how true is this analogy, and what are the main forces behind Bitcoin’s ability to compete with gold? Read on as we focus on the key drivers that might just launch Bitcoin to this lofty goal.

Bitcoin vs. Gold: A Store of Value Showdown

Bitcoin and gold have a number of important characteristics in common that make them attractive stores of value. And of course, both assets have a hardcapped supply. Bitcoin’s scarcity is algorithmically derived — it is limited to 21 million coins — and gold’s scarcity is rooted in nature itself. Carefully controlling the supply is an incredibly important part of keeping these items valuable and in demand over the long term. This is especially critical in a world where fiat currencies are all experiencing inflation.

In addition, both Bitcoin and gold have historically shown a low correlation with traditional assets such as stocks and bonds. This is what makes them such appealing diversification tools for any portfolio, because they can act as a powerful hedge against market volatility. During times of economic uncertainty, investors tend to rush into these assets as a flight to safety, which helps increase the value of those assets. It’s hard to decide if investors are flocking to Bitcoin or gold these days — both have soared in price in recent months on heavy demand.

Diversification and Alternative Assets

This characteristic of Bitcoin creates a unique opportunity from investor’s sharp and active diversification seekers. By including both assets in a portfolio, investors can potentially lower their risk and boost potential returns. The rationale is simple: when traditional assets are underperforming, Bitcoin and gold may hold their value or even appreciate, offsetting losses in other parts of the portfolio.

Bitcoin and gold offer a thrilling counterpoint to the status quo. That appeal becomes even stronger during periods of market distress. When stocks and bonds are facing headwinds, investors may seek refuge in assets that are perceived as less correlated with the broader market. This “flight to safety” increases the appetite for both Bitcoin and gold. In turn, this only strengthens their position as trustworthy stores of value.

Institutional Adoption: The BlackRock Effect

In recent years, institutional adoption has been one of the biggest drivers for Bitcoin’s growth. The entry of large financial institutions into the cryptocurrency space has provided legitimacy and credibility to the asset class, attracting further investment and driving up prices. From January 2024, the U.S. Securities and Exchange Commission (SEC) has approved applications for spot Bitcoin exchange-traded products (ETPs). This watershed moment paved the way for institutional investors to gain access to Bitcoin through vehicles they typically use and are comfortable with.

With over $8 trillion in assets under management, BlackRock, the one-time upstart of asset management, has driven this trend. When the Bitcoin ETP launched it immediately released a wave of pent-up institutional investment. As of this writing, the company owns nearly 1% of all Bitcoin currently in existence. This institutional involvement has much more than just driven up the price of Bitcoin. Further, it has played a role in legitimizing crypto as an asset class, smoothing out regulatory bottlenecks, and unblocking even more innovation and infrastructure-building.

The Rise of Institutional Players

Financial institutions are quickly moving to blockchain technology to improve their services. This move allows them to reduce expenses and stay competitive in an increasingly digital-first world. Major players like Brevan Howard Digital and Nickel Digital Asset Management have both recently announced impressive returns on their crypto investments. This is an example of how institutional players stand to make money off of this new asset class. Goldman Sachs and other conventional investment banks have increasingly entered the competition in crypto trades. They have since given their clients access to Bitcoin and Ethereum derivatives.

BlackRock approving Bitcoin has opened the floodgates for adoption by the rest of the market. Today, more institutional investors consider Bitcoin a new asset class and an ideal store of value. The company’s huge $10 trillion bet on Bitcoin has triggered a “fear of missing out” (FOMO) on Wall Street. This increased tension is creating a frenzied demand and driving up prices even more. The role of institutional investment is important. It powers a consistent stream of capital and provides powerful validation to the cryptocurrency.

Macroeconomic Factors: The US Dollar and Safe-Haven Appeal

Macroeconomic factors that have emerged over the past few years provide substantial support of Bitcoin’s value proposition. As history has proven, when the value of the US dollar falls, folks search for other assets to invest in. This surge in demand helps push up the value of Bitcoin. When the dollar weakens, investors prudently and rationally look for assets that are less correlated to the US economy. Bitcoin is the clear favorite that checks off all of their needs.

Furthermore, as the uncertainty pushes US Treasury bond yields up, investors will look for safe-haven assets including Bitcoin which will push up its value. In times of economic or geopolitical turmoil, investors flood to seek safe haven assets. They look for choices that will stand firm during the market chaos. Gold was long considered the only safe-haven asset, yet Bitcoin is quickly emerging as a strong alternative.

Bitcoin as a Safe Haven

Bitcoin is also maturing into a safe-haven asset. Its exceptional performance during recent times of economic uncertainty, such as the COVID-19 pandemic, only further bolsters this claim. As with other assets, that first reaction during the COVID-19 pandemic was a significant price drop. It quickly bounced back and in fact far outperformed conventional markets. More importantly, this demonstrates Bitcoin’s ability to become an effective hedge against various economic shocks. It also serves as a more dependable store of value in periods of crisis.

Bitcoin’s haven asset status is starting to take hold. It’s this rising acceptance that Collins believes will push its value to $1 million. As investors become more comfortable with Bitcoin as a long-term store of value, their capital makes them more likely to invest in it, creating higher demand and thus higher prices. Against the backdrop of a global economic landscape marked by persistent inflation and rising geopolitical tensions, those challenges have only heightened. Consequently, the risk of an impending recession only increases.

Mike Novogratz's $1 million Bitcoin prediction is certainly ambitious, but it's not entirely without merit. Bitcoin’s ability to compete with gold as a store of value is very promising. With institutional adoption on the rise and macroeconomic conditions increasingly favorable, it just might make it. Just know that the road to $1 million is going to have its share of highs and lows. Yet, the underlying headwinds driving Bitcoin’s continued expansion are both obvious and inarguable. As we DreamingCrypto still will go where signs lead, read the runes, and ride the moon with the rise of the decentralized age.