In a bold forecast, Joe Burnett, the vice president of Bitcoin strategy at Strive, suggests that artificial intelligence (AI) could drive Bitcoin’s value to an astounding $11 million by the first quarter of 2036. The prediction hinges on the notion that AI will significantly boost productivity, leading to deflationary pressures and, in turn, forcing central banks to expand the money supply.
Burnett’s report, published on Monday, outlines a scenario where AI-driven automation and cost reductions will create persistent deflation across goods and services. This, he argues, will squeeze profit margins and prompt policymakers to respond with sustained monetary expansion. His base case assumes that Bitcoin will grow to represent about 12% of the value of global financial assets, with global wealth compounding at an annual rate of 7% through 2036.
Aggressive Assumptions and Market Dynamics
To reach this valuation, Bitcoin’s market capitalization would need to increase by over 176 times, reaching a staggering $230 trillion. Currently, Bitcoin accounts for about 0.2% of all financial assets. Nic Puckrin, co-founder and lead market analyst at Coin Bureau, noted that this would make Bitcoin nearly 10 times as large as the current U.S. M2 money supply and almost four times as large as the U.S. equity market today.
The forecast implies a compound annual growth rate (CAGR) of around 53% per annum, which, while ambitious, is not unprecedented. Bitcoin has historically seen an average CAGR of 60% between 2015 and 2024. However, Puckrin cautions that a slowdown might be expected due to Bitcoin’s larger market capitalization.
The AI Deflation Engine and Monetary Policy
Burnett’s thesis is centered around the concept of an ‘AI deflation engine.’ He argues that AI-driven automation and cost reductions will create persistent deflationary pressure. In a debt-based fiat system, sustained deflation can strain credit markets because wages and asset prices may fall while debt obligations remain fixed in nominal terms. This, Burnett suggests, will push central banks and fiscal authorities to add liquidity to avoid a deflationary spiral.
“Under a debt-based fiat framework, persistent deflation destabilizes credit markets because wages and asset prices decline while mortgages, corporate loans, and sovereign debt remain fixed in nominal terms,” Burnett wrote. “As AI drives real-economy deflation, central banks and fiscal authorities expand liquidity to prevent a deflationary spiral.”
The Rise of Digital Credit
The report also highlights the emergence of ‘digital credit’ models, promoted by firms such as MicroStrategy, the largest corporate Bitcoin holder. Digital credit provides U.S. dollar income to investors through publicly traded securities backed by large Bitcoin balance sheets. These securities are issued by treasury firms to raise capital to acquire more Bitcoin, creating a ‘reflexive loop’ between global yield demand and Bitcoin accumulation.
Burnett foresees this digital credit system as the early stage of a new credit framework built on verifiably scarce money. “This will lead to a persistent increase in money relative to the supply of scarce assets,” he wrote.
Comparing Forecasts
Burnett’s $11 million forecast stands well above most bullish scenarios. For instance, ARK Invest predicted a 2030 Bitcoin price target of $1.5 million in their bull case and a $300,000 price target in the bear case. Despite the ambitious nature of Burnett’s prediction, it underscores the potential transformative impact of AI on global financial systems and the role Bitcoin could play in the future.
While the path to $11 million is fraught with uncertainties, Burnett’s forecast highlights the complex interplay between technological advancements, monetary policy, and the evolving role of digital assets. As AI continues to reshape the economy, the potential for Bitcoin to become a dominant global reserve asset remains a topic of intense debate and speculation.
About the Author
