Ark Invest releases Bitcoin valuation model: BTC starts at 500,000 USD per unit in 2030.

Author: David Puell, Analyst at Ark Invest

Compiled by: CryptoLeo (@LeoAndCrypto)

Editor's note:

At the beginning of the year, Bitcoin "dead 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, which are: $300,000 (bear market), $710,000 (baseline market), and $1.5 million (bull market). At that time, it was merely "screaming out" a price far beyond market expectations (like Plan B did), 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) of Bitcoin and its penetration rate (degree of adoption or market share).

Even more inspiring (exaggerated) is the calculation based on the active supply indicator of Bitcoin created by Ark Invest, which predicts Bitcoin prices in 2030 to be: $500,000 (bear market), $1.2 million (baseline market), and $2.4 million (bull market). If any of these TAM or penetration rates do not meet expectations, Bitcoin may fail to reach these price targets. Therefore, this model also carries some risks and biases. The following are the specific details of the Bitcoin price predictions, compiled by Odaily Planet Daily.

Price targets and assumptions

Our price target is the total contribution of TAM (Total Addressable Market) 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 the circulation of Bitcoin. It calculates the Bitcoin price by multiplying the maximum dollar benchmark demand scale of the segmented market with the penetration rate of Bitcoin in its market and dividing by the circulating supply of Bitcoin. The predicted price of Bitcoin in 2030 is obtained by summing the prices of all segmented markets (the following segmented markets/concepts).

Our estimate of the supply is based on the circulation of Bitcoin, which is expected to approach 20.5 million BTC mined by 2030. The contribution of each variable to the price target is as follows:

Expected contributors to capital accumulation (mainly):

1. Institutional investment, mainly through spot ETFs;

2. Bitcoin is referred to by some as "digital gold"; compared to gold, it is a more flexible and transparent means of storing value.

3. Emerging market investors seek havens that can protect them from the impacts of inflation and currency depreciation.

Expected capital accumulation contributor (secondary):

4. National treasury reserves, with other countries following the United States in establishing strategic Bitcoin reserves;

5. Corporate treasury reserves are diversifying into fiat currency as more and more companies utilize Bitcoin.

6. 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 for Bitcoin—we assume a CAGR of between 20% and 60% over six years, 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 using the total value of Bitcoin in 2024 and the annual compound growth rate, and divides it by the circulating supply of Bitcoin in 2030 to determine its price.

Finally, we describe the contribution of TAM and penetration rate to the price targets during 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 benchmark scenario, while institutional investment contributes the most to our bull market scenario. Interestingly, the contributions of national treasuries, corporate treasuries, and on-chain financial services in Bitcoin are relatively small in each scenario. In the table below, we detail the relative contributions of our six predicted sources of capital accumulation to the bear market, benchmark market, and bull market situations:

Odaily Planet Daily Note: The following charts show the estimated TAM for the segmented market in 2030, the Bitcoin penetration rate under three market conditions, and the contribution ratio in the above chart.

1. Potential contributors to capital accumulation: institutional investment

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 generated by collective decisions of investors, issuers, and the supply and demand sides of capital, the global market portfolio can be seen as the actual representation of the investable opportunity set for all investors worldwide.

By 2024, the total addressable market (TAM) for global investment portfolios is approximately $169 trillion (excluding a 3.6% share of gold). Assuming an annual compound growth rate of 3%, its value is expected to reach about $200 trillion by 2030.

We assume that the penetration rates for the bear market and benchmark market are 1% and 2.5% respectively, both lower than the current 3.6% share of gold. Therefore, the bear market and benchmark market represent a conservative view of Bitcoin adoption. In a more aggressive bull market, we assume that the Bitcoin penetration rate reaches 6.5%, nearly double the current share of gold.

2. Potential contributors to capital accumulation: digital gold

The contribution of digital gold assumes a ratio of TAM relative 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 appealing narrative that will drive its penetration rate.

3. Potential Contributors to Capital Accumulation: Emerging Market Safe Havens

Emerging market safe haven TAM is based on the monetary base of all developing countries (defined by the IMF/CIA, also known as "underdeveloped" economies). We believe that this use case for Bitcoin has the greatest potential for capital appreciation. In addition to its value storage characteristics, Bitcoin's low barrier to entry provides individuals with internet access an investment option that may lead to capital appreciation over time, unlike defensive allocations such as the US dollar—thereby maintaining purchasing power and avoiding depreciation of local currencies.

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 public outside of banks, checkable deposits, and traveler's checks) plus savings deposits (including money market deposit accounts), small time deposits of less than $100,000, and retail money market mutual fund shares.

4. Potential contributors to capital accumulation: National Treasury

Although El Salvador and Bhutan currently lead the world in national-level Bitcoin adoption, there is an increasing number of advocates for Bitcoin strategic reserves—especially after Trump took office, when he issued an executive order on March 6 demanding the establishment of BTC reserves in the United States. Despite our bearish and benchmark assumptions being relatively conservative, we believe that the situation in the U.S. may further validate the 7% penetration rate in our bullish assumptions.

5. Potential contributors to capital accumulation: Corporate treasury

Inspired by MicroStrategy's successful acquisition of Bitcoin since 2020, other companies have also begun to incorporate Bitcoin into their corporate treasury reserves. By the end of 2024, 74 publicly listed 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) could ultimately approach the 10% assumed in a bull market.

6. Potential contributors to capital accumulation: Bitcoin on-chain financial services

The native financial services of Bitcoin are becoming emerging contributors 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 enables 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 realistic expectations.

The ARK hypothesis 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 of these is by calculating the Bitcoin that is lost or held long-term, using the on-chain transparency of Bitcoin to estimate its liquid supply – which we refer to as "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 real "volatility", as shown below.

As shown in the figure, the network activity of Bitcoin has remained around 60% since the beginning of 2018. We believe that this level of activity indicates that approximately 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 detail in the ARK whitepaper "Cointime Economics: A New Framework for On-Chain Analysis of Bitcoin."

Then, we apply the same bear market and benchmark market TAM and penetration rates to the scenario where the active supply volume is expected to reach 60% by 2030 (assuming that activity remains stable over time), as shown below:

Based on this, we arrive at the following price target, which is approximately 40% higher than our base 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 index for Heat Coins, is: $500,000 (bear market), $1,200,000 (baseline market), and $2,400,000 (bull market).

Importantly, the valuations constructed using this more experimental approach are more aggressive than the valuations we see in bear, baseline, and bull market scenarios. Since our official price targets tend to be more conservative, we focus solely on the total supply of Bitcoin. Even so, we believe that this more experimental approach highlights the scarcity of Bitcoin and the loss of supply, which is not reflected in most valuation models today.

Extra

I briefly looked at the Cointime Economics framework, which proposes a new system for analyzing Bitcoin's valuation and inflation rate. It calculates the economic status and supply activity of Bitcoin through its Liveliness and Vaultedness, allowing for the measurement of the trading activity level within the Bitcoin network and the ratio of unused coins. By utilizing these two indicators, Bitcoin's supply can be classified into active supply and unused supply.

The framework also proposes a metric unit called "Coinblock," which provides a new set of on-chain analytical metrics to measure Bitcoin's activity. The number of Coinblocks is calculated by multiplying the holding time by the quantity of Bitcoin. It also introduces the concepts of "Coinblock creation," "Coinblock destruction," and "Coinblock storage," and based on this, constructs a series of new economic indicators, such as Bitcoin's activity level and the degree of being locked, to measure the dynamic changes and economic status of the Bitcoin market. Additionally, the content showcases the potential of Cointime Economics in improving market valuation models, measuring supply activities, and creating new models through case studies. The Coinblock concept and the Cointime economic framework may become the main reference for Bitcoin valuation in the future. Interested friends can take a look at the original PDF.