Over the past seven months, Bitcoin’s price has fluctuated between $73,777 and $49,000, casting a shadow over the market’s overall sentiment. In a recent analysis shared on X, Will Clemente III, co-founder of Reflexivity Research, tackles the prevailing impatience and uncertainty among investors, explaining why he remains optimistic about Bitcoin’s future.
Clemente’s confidence stems from a long-term perspective, looking ahead over the next decade. Utilizing his expertise in portfolio construction and asset allocation, he highlights the significance of identifying major economic trends that are expected to emerge. “I’ve been thinking a lot about portfolio construction lately and position sizing. I keep coming back to there’s nothing I’d rather go into a coma for 10 years and hold than Bitcoin,” Clemente asserts, underscoring his belief in Bitcoin as a premier long-term asset.
Clemente’s analysis is based on the anticipation of certain macroeconomic trends. He advises investors to consider the biggest trends likely to dominate the next decade and to adjust their portfolios accordingly. This could mean either heavily investing in the most confident trend or diversifying investments across several promising trends based on their potential influence.
He personally advocates for focusing on the most predictable trend: the continuous growth of the U.S. deficit and the consequent need for the government to debase the currency to manage this debt. Clemente argues that this scenario offers a more foreseeable outcome compared to other technological trends like artificial intelligence or space exploration. “Compared to other technological trends, the debasement one is pure math. Additionally, the way to bet on other technological trends, for instance AI or space, isn’t as clear as debasement, given there’s no straightforward way to position for it like there is with Bitcoin,” he writes.
Clemente’s optimistic stance on Bitcoin is further bolstered by his analysis of potential capital inflows from sovereign wealth and pension funds. He estimates that if these entities allocated just 1% of their capital to Bitcoin, it would inject around $460 billion into BTC, potentially doubling its market cap and pushing prices to between $150,000 and $200,000 per Bitcoin.
He also speculates on the impact of a larger allocation, suggesting that if concerns over the deficit grow, these institutions might allocate up to 3%, translating into $1.4 trillion flowing into Bitcoin. The potential for upside is even greater. “What happens if it eats into the $10 trillion-$15 trillion of gold’s monetary premium? Or the combined monetary premium in treasuries, equities, and real estate that’s currently invested to safeguard against currency debasement?” Clemente mused.
Concluding his analysis, Clemente reasoned that a $1 million price per Bitcoin by 2034 is plausible when considering the reduced purchasing power of the dollar. “Also would like to sprinkle on top that this is not factoring in dollars being worth significantly less in the future due to debasement, so $1 million BTC in 2034 is not as crazy as $1 million BTC in 2024,” he remarked.
However, Clemente did offer a caveat, noting, “I do think Bitcoin’s days of 100%+ compound annual growth rate are gone, but that’s not to say it won’t outperform equity indices by a lot — and on a confidence-adjusted basis, I don’t see anything as compelling in the marketplace today.”
At the time of reporting, BTC was trading at $56,481.
