As of this writing bitcoin's marketcap is $253 billion with $15,127 per bitcoin and there are about 16.7 million coins in current circulation. A $1 million dollar valuation from here would mean bitcoin would have to increase in price by 66x or a 6600% increase in price which seems unreasonable. Furthermore at this price that would mean bitcoin's marketcap would be 16 trillion. You might be yelling out marketcap matters! Its prohibitive to reach such a valuation!
First let's get one thing clear, there are not 16 million bitcoin floating around, there are only around 12 million. I know coinmarketcap says 16 million in circulation but research by Chainalysis (a blockchain security firm that explores the blockchain for federal governments) finds that up to 4 million bitcoin have been lost forever due to death, lost private keys, and the assumption that the famed "Satoshi coins" have been lost forever since Satoshi has not been heard from since 2011.
Now, let's look at the global supply of money (M1 and M2 only) which is around 60 trillion. This is all the money in pockets, mattresses, savings accounts, checking accounts, etc. If we are assuming only 12 million bitcoin in existence this would mean 12 trillion out of that 60 trillion would flow into bitcoin, that represents 1 in every 5 dollars and dollar equivalents out there at this moment. Probably won't happen anytime soon but let's look at the steady march of time and what that does to the bitcoin price:
John McAfee is betting his now famous man-part that bitcoin should be $1 million by 2020. Ok so that calls for a 6600% increase over two years, which again sounds insane. But is it? Given that federal reserve backed currencies are inflationary assets and the global rate of inflation is 3.15% over two years the dollar will be worth 6.2% less than it is now (I know this calls for a lot of assumptions and if the US fed decides to print more in case of economic decline it will be even more) and some of that loss will make bitcoin worth more (not exactly a 6.2% increase since the total amount of bitcoins themselves will increase). More importantly lets assume the global money supply (M1 and M2) would increase by the inflation rate which would now put the supply at 63.8 trillion (assuming central banks to print to stave off some massive economic decline).
Let's also consider that there will be more and more rich people ($1 million net worth or more) whose fund managers, financial advisers, and country club friends will be telling them about this fantastic bitcoin investment. Right now there are around 2000 billionaires in the world and 15 million millionaires that control 45% of the world's wealth. If this population gets FOMO with bitcoin and puts just 1% of their wealth into bitcoin that is around $1 trillion dollars into the crypto-asset.
Right now only 1000 people hold 40% of the world's bitcoins and only around 3 million actual holders. Blockchain analysis shows they aren't selling anytime soon, yet there are 7 billion people globally, 3.5 billion of which could potentially buy the crypto-asset because they have internet access. Let's also consider the decline of the previous baby boomer generation and the rise of the millenials. Millenials are much more receptive to bitcoin and this generation stands to spend money to buy some bitcoin. Some surveys show around 42% of American millenial males intend to purchase bitcoin at some point in their life. Around 30% are more receptive of cryptocurrency compared to stocks. Compound this with African and Asian millenials that largely don't have access to US capital markets and a significant amount that are unbanked and who are wary of their own government currencies and who see bitcoin as a potential tool to grow their savings. That is a huge sum of money flowing into bitcoin.
By 2020 if interest keeps rising and millenials keep buying and global inflation stays steady it's not entirely unreasonable that bitcoin could reach a multi-trillion dollar valuation. John McAfee may be right, and his man-part would assuredly breath a sigh of relief.