A number of high-profile investors — including Cathie Wood of Ark Invest and Michael Saylor of Strategy (MSTR 5.03%) — have already predicted big things ahead for Bitcoin (BTC 3.02%). The consensus among these bulls is that Bitcoin could hit $1 million within the next few years.

The newest member of this club is Brian Armstrong, chief executive officer of crypto exchange Coinbase Global (COIN 2.61%). So is he (and the others) right?

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Institutional adoption

The biggest reason to be optimistic about Bitcoin, Armstrong says, is the soaring rate of institutional adoption. Simply put, large institutional investors are now choosing to allocate a bigger and bigger portion of their portfolios to Bitcoin. That type of steady buying pressure is certain to move the price of Bitcoin upward over time.

The easiest place to see this buying pressure at work is with the spot Bitcoin exchange-traded funds (ETFs). In less than a year, these spot Bitcoin ETFs attracted more than $100 billion from investors.

Institutional adoption is also coming from Bitcoin treasury companies, all of them based on Strategy’s business model of rapid Bitcoin accumulation using funds raised in the capital markets. According to the latest data from BitcoinTreasuries.net, these companies hold more than 1 million bitcoins, or about 5% of all Bitcoin in circulation. The lion’s share, of course, belongs to Strategy, which has Bitcoin holdings worth an estimated $70 billion.

At the same time, the U.S. government is embracing Bitcoin as part of its overall plan to make America the “crypto capital of the world.” The best evidence of this was the decision to launch a Strategic Bitcoin Reserve earlier this year. While this fund has not yet embarked on any new Bitcoin buying, the government considers Bitcoin a strategic asset worthy of stockpiling in the future.

Bitcoin’s scarcity

Another factor in Bitcoin’s favor is its inherent scarcity. The total lifetime supply of Bitcoin is capped at 21 million coins, and 19.9 million are already in circulation. So we are fast approaching a point where all the Bitcoin that can ever exist already circulates.

As the number of Bitcoin use cases grows, and as more institutional investors pile into Bitcoin, the demand for the coin is going to be off the charts. Soaring demand, combined with a fixed supply, should lead to higher prices. That helps to explain why Bitcoin has skyrocketed in value during the past few years.

Can Bitcoin continue to grow at its previous pace?

So far, so good. A huge ramp-up in demand, combined with the scarcity enforced by Bitcoin’s inflexible and unchanging algorithm, is a catalyst for price appreciation. Any Economics 101 textbook will tell you that. It’s the law of supply and demand at work.

But there’s just one slight problem with this thesis. Bitcoin is only up 20% this year, in what should have been a historic barnstorming type of year. Many thought that Bitcoin would easily double in price, from $100,000 to $200,000 by the end of 2025.

If you run the numbers, a price tag of $1 million may not be within reach if Bitcoin only grows at a pace of 20% per year. Based on its current price of $114,000, a compound annual growth rate (CAGR) of 20% would only get Bitcoin to the $275,000 price level within five years.

In order to hit a price of $1 million, as Armstrong predicts, Bitcoin would need to grow at a CAGR of 55% per year. That’s certainly possible, given that Bitcoin has shown the ability to crank out triple-digit percentage returns in many years.

But just how probable is it? That CAGR is higher than even the fastest-growing tech companies are producing. Nvidia (NVDA 0.43%), for example, only grew at a CAGR of 38% during the past five years.

Right now, online prediction markets are giving Bitcoin a 22% chance of hitting $150,000 this year, and only a 5% chance of hitting $200,000. The most likely outcome right now (with a 66% likelihood) is for Bitcoin to hit a price of $125,000 by year-end.

Yes, that’s impressive. It would mark yet another all-time high for Bitcoin. But is it enough to keep investors coming back for more in 2026?