Novogratz Says Crypto Will Hit $20 Trillion – What Would That Look Like?
Famed billionaire investor Mike Novogratz made an impressive prediction on cryptocurrency as a whole at the Bloomberg Invest Summit in New York. According to Novogratz, cryptocurrency is heading for what he calls a whole-market $20 trillion USD valuation. We’ve heard some big predictions before about where cryptocurrency is going, but what would a $20 trillion market cap really look like?
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Before we run the numbers, it is important to note who Mike Novogratz is. Novogratz is a billionaire investor and, according to Yahoo Finance, a “former Goldman Sachs and Fortress trader”. Those are two of the world’s largest and most highly valued institutional investment banks, so his opinions are not to be taken lightly.
Novogratz is still human, however, and so he of course could be wrong about all of this. In any case, let’s imagine he’s right. What would a $20 trillion market look like?
Post-Novogratzian Bitcoin and Ethereum
Bitcoin and ether continue to reign supreme in the cryptocurrency market, so it’s reasonable to assume that this trend will continue at least for the foreseeable future. Currently, bitcoin dominance is at around 38.5 percent of the approximately $300 billion crypto market.
Ether, standing at second place, currently represents just under 18 percent of the market as a whole, and is itself currently valued at $57.5 billion.
In order to calculate where these assets would be price-wise if the market as a whole were to hit $20 trillion, we’re going to need to do some math. For the sake of these calculations, we’re going to assume that both bitcoin and ether continue occupying the same percentages of the crypto market.
Based on these assumptions, a Novogratzian bitcoin – at current supply levels – would be worth roughly $450,000. Similarly, each current ether in supply would cost around $35,000. This does not take into account any increases in supply.
What About Bitcoin Cash and Litecoin?
For the sake of the argument, let’s include the two other cryptocurrencies that are available for trading on Coinbase today.
Bitcoin Cash’s current market cap represents five-and-a-half percent of all cryptocurrencies. Assuming this rate held, this would mean Bitcoin Cash would be worth $1.1 trillion in total – a price per coin of around $64,000.
Litecoin has slipped recently and is today sitting at the number six position on coinmarketcap. It represents about two percent of the cryptocurrency market. In Novogratz’s $20 trillion market, this would give Litecoin a market cap of $402 billion and a price-per-coin of a little over $7,000.
Is $20 Trillion Possible?
While it is interesting to run the numbers and consider what these individual assets would be worth (assuming their percentage of the total cryptocurrency market cap did not change, and for simplicity not factoring in supply increases), it’s also important to consider whether or not this could actually ever eventuate.
Novogratz said that the market:
“… won’t go there right away. What is going to happen is, one of these intrepid pension funds, somebody who is a market leader, is going to say, you know what? We’ve got custody, Goldman Sachs is involved, Bloomberg has an index I can track my performance against, and they’re going to buy. And all of the sudden, the second guy buys.”
This, according to Novogratz, will lead to a chain reaction that will potentially cause both retail and institutional investors to get deeply involved in cryptocurrencies and perhaps move away from other assets. Novogratz recently teamed up with Bloomberg to create the Bloomberg Galaxy Crypto Fund to track crypto prices.
Another thing to consider when calculating the value of these assets is how many of these coins are permanently lost. Some estimates have suggested that as many as 2.7 million bitcoin are effectively lost or otherwise permanently inaccessible. This could have a strong impact on the number of freely flowing bitcoin, potentially leading to an impact on price.
Potential or Pure Fantasy?
Novogratz does not appear to take into consideration the possibility of cryptocurrencies replacing fiat currencies in general. Were that to occur, people using cryptocurrencies for their day-to-day expenditures, savings, and investments could drive crypto to the magical $20 trillion market cap sooner than even the historically bullish Novogratz predicts.
But will it happen? And will the assets we know and love today continue to maintain their relative dominance in the market as a whole? Only time will tell.
Do you think Novogratz’s predictions will come true? Let us know your thoughts in the comments section below.
Images via Pixabay