tl;dr
ARK uses a sum-of-the-parts model to value Bitcoin by estimating adoption across six use cases, each with a total addressable market (TAM) and penetration rate. The gold market TAM remains static, assuming zero-sum growth. For 2030, ARK projects Bitcoin prices under three scenarios: bear (~$300,000)...
ARK employs a “sum-of-the-parts” valuation model for Bitcoin, estimating its value by aggregating projected adoption across six distinct use cases. Each use case is paired with a total addressable market (TAM) and an anticipated Bitcoin penetration rate. While most TAMs are forecasted to grow moderately through 2030, the gold market's size remains static to reflect a zero-sum assumption.
For 2030 price scenarios, ARK presents three outlooks:
- Bear case: approximately $300,000 per Bitcoin
- Base case: roughly $710,000 per Bitcoin
- Bull case: around $1.5 million per Bitcoin
These projections hinge on diverse adoption rates across critical markets.
Institutional investment is a fundamental driver, with Bitcoin adoption assumptions as follows:
- 1% of institutional portfolios in the bear scenario
- 2.5% in the base case
- 6.5% in the bull case
These figures are based on a projected $200 trillion global institutional portfolio by 2030.
ARK’s digital gold thesis anticipates Bitcoin capturing a notable share of the $18 trillion gold market:
- 20% penetration in the bear case
- 40% in the base case
- 60% in the bull case
Bitcoin’s advantages include portability, scarcity, and verifiability, positioning it strongly against gold.
As a safe haven in emerging markets with unstable currencies, Bitcoin adoption is modeled at:
- 0.5% of emerging market M2 money supply in the bear scenario
- 2.5% in the base case
- 6% in the bull case
The total addressable market here is projected at roughly $68 trillion by 2030.
Nation-state and corporate treasuries provide additional but smaller valuation input:
- Nation-states may adopt Bitcoin in foreign reserves, with TAM estimated at $15 trillion, and uptake from 0.5% to 7% depending on the scenario
- Corporations might replace part of their global cash holdings (~$7 trillion TAM) with Bitcoin at adoption rates between 1% and 10%
Examples include countries like El Salvador and companies like MicroStrategy.
On-chain financial services, including Layer 2 and DeFi applications built on Bitcoin, currently represent about $35 billion but are expected to grow:
- 20% annually in the bear case
- 40% per year in the base case
- 60% annually in the bull case
Despite strong growth, this sector remains a minor contributor to Bitcoin’s overall value.
ARK also evaluates a model focusing only on the circulating “active” Bitcoin supply—excluding lost or dormant coins. This active supply adjustment can enhance 2030 price estimates by approximately 40%, potentially raising the base case valuation above $1 million per Bitcoin.
Key factors underpinning ARK’s bullish outlook include increased institutional access through ETFs and custody solutions, wider recognition of Bitcoin as digital gold, greater adoption in emerging economies, and technological upgrades like the Lightning Network. However, these forecasts are illustrative, subject to significant uncertainty, and ultimately reliant on market evolution and adoption trajectories.