In interview with Yahoo Finance’s “Wealth” Ric Edelman, founder of the Digital Assets Council of Financial Professionals and $291 billion asset manager Edelman Financial Services, made a striking Bitcoin price prediction. Edelman argued that Bitcoin’s price could rise to $420,000, attributing this potential augment to the modest global asset allocation towards Bitcoin.

Why Bitcoin Price Will Hit $420,000

During the interview, Edelman delved into the benefits of investing in Spot Bitcoin ETFs. He noted that these instruments make Bitcoin accessible in the same way as classic ETFs, which are common and familiar to investors using regular brokerage accounts.

“They are incredibly inexpensive, 20-25 basis points cheaper than say Coinbase or another cryptocurrency exchange, and by being in a brokerage account you can rebalance, you can get dollar cost averaging, you can harvest tax losses,” Edelman emphasized. This configuration simplifies the investment process, making it similar to managing any other asset class, thus increasing its attractiveness to a wider audience.

However, Edelman was also candid about the challenges and risks associated with Bitcoin. Despite the advantages offered by ETFs, Bitcoin’s inherent nature as a volatile and risky investment remains unchanged. “It’s still Bitcoin, which means it’s still very volatile and still very risky. You can still lose everything,” he warned.

Edelman pointed to continued regulatory uncertainty, potential lawsuits and widespread fraud as significant risks that investors must manage carefully. He also criticized the tendency to invest due to fear of missing out (FOMO), describing it as a destitute investment rationale.

Looking ahead, Edelman discussed the regulatory landscape, particularly regarding other cryptocurrencies such as Ethereum. He noted that he has several Ethereum ETF applications pending, and while he anticipates initial rejections, approvals could come by the end of the year.

“Once you have a Bitcoin ETF and an Ethereum ETF, I’m not sure how quickly you’ll see something different, but those two will kind of open doors in the long run. In five years, there will be dozens, maybe even hundreds of cryptocurrency ETFs,” Edelman speculated. This perspective highlights a significant shift towards mainstream acceptance and integration of cryptocurrencies into classic financial products.

Edelman’s prediction that Bitcoin will reach $420,000 is based on the assumption of global asset diversification. According to his calculations, if all global asset holders allocated just 1% of their assets to Bitcoin, it would translate into a market capitalization of $7.4 trillion for Bitcoin alone.

“It’s extremely straightforward. “If you look at the world’s assets, the value of the stock market, globally, the bond market, the real estate market, the gold market, you just look at all the assets that everyone in the world owns, it’s about $740 trillion,” he explained. Such an allocation would dramatically augment Bitcoin’s market capitalization , significantly increasing its price.

Moreover, Edelman highlighted the shift in the perception of Bitcoin from a transaction currency to a store of value similar to gold. “The Bitcoin exploit case, while powerful in its message, is not the strongest argument. Now it is like gold, a store of value,” he said. This change in perception has attracted more institutional investors who view Bitcoin as a security or alternative asset class, similar to other non-traditional investments such as art or collectibles.

At the time of publication, the BTC price was $61,909.

Featured image from Wealth Management, chart from TradingView.com