In the past decade Bitcoin (CRYPTO: BTC) is one of the best performing assets in the world. It has skyrocketed in value from just $100 to its current value of $65,000.
The good news is that it may not be too late to invest in Bitcoin’s extraordinary upside potential. According to Michael Saylor, founder and executive chairman of MicroStrategyBitcoin is likely to reach a price of $13 million by 2045. Based on current prices, this implies a further gain of approximately 20,000%. That may sound hard to believe, but there are at least two good reasons why this could actually happen.
Institutional and corporate adoption
One key factor, Saylor says, is Bitcoin’s growing institutional and corporate adoption. On Wall Street, Bitcoin is increasingly seen as an asset class in its own right, and new investment products are being created to give investors exposure to it. The new spot Bitcoin Exchange-Traded Funds (ETFs), which launched in January, are perhaps the best example of this.
And that’s just the tip of the iceberg when it comes to institutional and corporate adoption. For example, Ark Invest’s Cathie Wood has outlined eight different use cases for Bitcoin, all of which are helping to bolster global demand for the cryptocurrency. For now, the main use case is for Bitcoin to be a store of value, with institutional investors and central banks buying it as an alternative to gold.
This demand alone would likely not be enough to propel Bitcoin to an extraordinary 20,000% gain. But when you add Bitcoin’s inherent scarcity, things get interesting.
Bitcoin’s lifetime supply is limited to 21 million coins, and there are already 19.8 million coins in circulation. According to the Bitcoin algorithm, the remaining supply will trickle down over the next hundred years. When demand grows rapidly but supply does not, there is usually upward price pressure.
Bitcoin as ‘sound money’
A second important factor is Bitcoin’s potential ability to displace the US dollar as the world’s leading reserve currency. Saylor calls Bitcoin “sound money,” to distinguish it from fiat money, which he says is inherently flawed. In the United States, for example, government spending has led to a national debt of $35 trillion. The only way to pay off all that debt is to print more money, further devaluing the US dollar. That approach has worked for now, but at some point the enormous debt mountain could collapse.
Some investors are already starting to realize this and are moving their money from dollars to Bitcoin. At some point, this steady flow could turn into a tsunami. Saylor has now even highlighted 2025 as the start of what he calls a decade-long “digital gold rush.” That’s when Bitcoin could really become mainstream and everyone will be looking for the best way to gain exposure.
It’s easy to be skeptical, but there is some merit in the fact that Saylor has become one of the biggest Bitcoin buyers in the world. He, as they say, puts his money where his mouth is. His company, MicroStrategy, has become the largest corporate buyer of Bitcoin in the world, with a massive Bitcoin supply now valued at more than $16 billion. And he’s so confident in Bitcoin’s future that MicroStrategy is now issuing debt to buy more.
How realistic is this price prediction?
Of course, it’s worth stress-testing some of these assumptions. Any time someone tells you that an asset will increase in value by 20,000%, you should be wary. After all, think about what a $13 million price for Bitcoin means. Such a high price tag would imply a valuation for Bitcoin of over $250 trillion. That is a considerably higher rating than for the whole S&P500. Quite simply: Bitcoin would become the most important and valuable asset in the world.
That said, it’s hard to ignore all the warning signs that are now flashing red. Over the past thirty years we have become almost numb to the idea of a massive collapse of the US national debt. And emerging countries have moved away from the US dollar. But what if Bitcoin really does become a reserve currency for the rest of the world?
I am not nearly as optimistic about Bitcoin as Michael Saylor, but I do believe in the idea that Bitcoin will play a more important role in the global financial system over the next twenty years. For that reason, I now buy Bitcoin and hold it for the long term.
Don’t miss this second chance at a potentially lucrative opportunity
Have you ever felt like you missed the boat on buying the most successful stocks? Then you would like to hear this.
On rare occasions, our expert team of analysts provides a “Double Down” Stocks recommendation for companies they think are about to pop. If you’re worried that you’ve already missed your chance to invest, now is the best time to buy before it’s too late. And the numbers speak for themselves:
-
Amazon: If you had invested $1,000 when we doubled in 2010, you would have $21,139!*
-
Apple: If you had invested $1,000 when we doubled in 2008, you would have $44,239!*
-
Netflix: If you had invested $1,000 when we doubled in 2004, you would have $380,729!*
We’re currently issuing ‘Double Down’ warnings for three incredible companies, and another opportunity like this may not happen anytime soon.
See 3 “Double Down” Stocks »
*Stock Advisor returns October 14, 2024
Dominic Basulto has positions in Bitcoin. The Motley Fool holds and recommends positions in Bitcoin. The Motley Fool has a disclosure policy.
1 Top Cryptocurrency to Buy Before It Surges 20,000%, According to MicroStrategy’s Michael Saylor, originally published by The Motley Fool
