Bitcoin Hit $10,000
Bitcoin hit $10,000 on Coinbase about 30 minutes ago.
Bitcoin and Ethereum are becoming cryptocurrency brands. The more new stories that refer to them, and the more companies that trade them, the greater the mystique.
I’ve noticed that Coinbase’s focus on Bitcoin, Ethereum and Litecoin seems to help those cryptocurrencies.
People who use Coinbase, which apparently is a lot1, have no other options but to buy those currencies on the Coinbase exchange.
Coinbase is probably the most well known cryptocurrency exchange, and it doesn’t offer trading of other cryptos (the app “CoinCap” shows real time Bitcoin, Ethereum, Litecoin and many other lesser known cryptocurrency price fluctuations – here Bitcoin sits above $10,000 for the first time).
How many U.S. households own Bitcoin?
So, with Bitcoin at $10,000 and increasing logarithmically, how much higher can it go?…
And will Bitcoin be an investment that the “Everyman” will invest in?
There are approximately 125 million households in the U.S.… Of those, approximately 46% of households own stocks, or around 62,000,000 households.
However, approximately 30% of stock owning U.S. households own less than $10,000 in stocks.
Apparently Coinbase has 13.3 million user accounts as of this month… Charles Schwab has 10.6 million and Vanguard has around 20 million accounts.
If the average holding of Bitcoin is only 10% of what the median value of stocks held by households in the U.S. is, it would be around $1,200… 2
If every U.S. household in the 62,000,000 that owned stocks also owned Bitcoin at $1,200 per household, that would suggest a potential $74,400,000,000 (or $74 trillion dollar market cap of Bitcoin).
At a maximum of 21,000,000 Bitcoin that can exist, this implies a value per Bitcoin of $3,542.00 when spread evenly across every household.
However, the ownership of stocks is very skewed… As mentioned above, the majority of individual households that own stocks own less than $10,000 in stocks.
The ownership of Bitcoin is also very skewed…
According to Bitinfocharts.com, about 75% of Bitcoin addresses, also known as “wallets”, have less then 0.1 Bitcoin in them. At a value of $10,000 per Bitcoin, 0.1 Bitcoin is worth $1,000.
The Winklevoss brothers apparently own 1% of all Bitcoins in existence by themselves, valued today at around $1.71 billion (at a market cap of Bitcoin of $171,000,000,000, today).
While the wealthiest 1% surely do not all own a 1% share of Bitcoin, most early Bitcoin investors probably own >10,000 Bitcoin. The number 10,000 was almost a throwaway amount of Bitcoin only a few years ago. 3
Just reducing the circulation of Bitcoin’s availability to the rest of the market by backing out the $1.71 billion in Bitcoin that the Winklevii own, increases the value per Bitcoin to $8,061, if Bitcoin ownership was spread across the same number of U.S. households that own U.S. stocks.
Continuing on with this line of thinking suggests that, if ownership of Bitcoin increases, and hoarding of Bitcoin continues, Bitcoin’s value per coin could ultimately be much higher.
Image credit: Winklevoss Brothers (Getty Images)
Footnotes
- Supposedly Coinbase has more accounts than Charles Schwab
- The median value of stocks owned by households in the U.S. is $12,000.
- The first legitimate Bitcoin transaction was on May 22nd, 2010 when Laszlo Hanyecz paid 10,000 Bitcoin for 2 Papa John’s pizzas. Today those “pizzas” would be worth $100 million.