The meteorite-like rise of Bitcoin (CRYPTO: BTC) According to Michael Saylor, the executive chairman and co-founder of MicroStrategy (NASDAQ: MSTR)At the Bitcoin Prague event in June, Saylor predicted that Bitcoin could eventually reach a value of $8 million per coin.
Given Bitcoin’s current price of around $60,000, that would represent a return on investment of over 13,000%. That’s equivalent to Bitcoin rising from $450 to $60,000 — a process that took nearly a decade. As a result, it might be tempting to dismiss this bold $8 million prediction. But there are two very good reasons why Saylor might be right.
Bitcoin is “perfect money”
Since Bitcoin is a digital currency created by an algorithm, it has some very specific properties that set it apart from traditional money. First, it has a finite supply. You can’t just print more Bitcoin like a cash-strapped government can print dollars. There can only be 21 million coins in existence, and the Bitcoin algorithm carefully controls the total circulating supply. Furthermore, Bitcoin is a completely decentralized currency, meaning that no single sovereign power or government can control it.
It’s these qualities, Saylor says, that help make Bitcoin “the perfect money.” It’s anti-inflationary, making it a potential hedge against inflation. It’s a superior long-term store of value, making it an alternative to physical gold. And it’s resistant to government seizure, making it a potential safe haven if you live in a country with an overreaching central authority.
Saylor suggests that the differences between Bitcoin and traditional currencies will become even greater over time, leading to capital flows into assets denominated in Bitcoin rather than dollars. It could also lead to Bitcoin revolutionizing the global financial system as the world transitions to a new Bitcoin standard.
Admittedly, if you’re new to Bitcoin, this all sounds incredibly optimistic. Saylor, who is perhaps the most prominent Bitcoin bull in the world right now, is often so unwaveringly optimistic about Bitcoin’s future that some of his predictions ring hollow.
Still, it’s hard to deny that the U.S. government is running unsustainable deficits. By some estimates, the U.S. is adding $1 trillion in new debt every 100 days. At some point, people will stop buying U.S. government debt, and that’s when the “Bitcoin is perfect money” scenario could play out.
Bitcoin offers “corporate immortality”
Saylor has also been at the forefront of proposing that companies add Bitcoin to their balance sheets as a treasury asset. That’s the approach pioneered by MicroStrategy, which embarked on an aggressive Bitcoin-buying strategy in 2020. Since then, MicroStrategy has bought so much Bitcoin that it’s now the largest corporate holder of Bitcoin in the world — and it’s not a close call. MicroStrategy now owns more than 1% of all Bitcoin, worth about $15 billion.
According to Saylor, holding Bitcoin on a company’s balance sheet creates the possibility of “corporate immortality.” Because Bitcoin’s value will increase over time, a company’s value will also increase in the future.
To illustrate his point, Saylor points to the last 100 years of American economic history. How many companies from 100 years ago are still around? A handful at best. By contrast, the last sliver of the last Bitcoin will be mined in the year 2140, so companies that own significant amounts of Bitcoin today theoretically have the potential to stay around for at least 100 years.
As more companies buy Bitcoin, its price will rise due to this new buying pressure. Keep in mind that at some point you may have to suspend your faith for this scenario to happen. For example, during the last Bitcoin boom, companies like Tesla were lining up to buy Bitcoin. However, that strategy didn’t quite work out as they thought, due to Bitcoin’s huge volatility.
“Everyone gets Bitcoin for the price they deserve”
Of course, by this point you’ve probably come to the realization that Saylor’s $8 million price prediction is based more on a macro story about where the world is headed than a numbers-driven, analytical model. So it’s perfectly reasonable to decide to pass on Bitcoin as an investment opportunity. And rightly so.
But, as Saylor cautions, “Everyone gets Bitcoin at the price they deserve.” Saylor says he first thought about buying Bitcoin in December 2013, when it was trading at $892. But the Bitcoin story just seemed too good to be true. So he waited and waited, eventually buying Bitcoin when it was trading at $9,500. That was the price he deserved.
While I am not convinced that Bitcoin will reach $8 million anytime soon, I am convinced that a paradigm shift is taking place in the global economic order. For that reason, I am increasingly optimistic about Bitcoin’s ability to increase in value over the long term.
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Dominic Basulto has positions in Bitcoin. The Motley Fool has positions in and recommends Bitcoin and Tesla. The Motley Fool has a disclosure policy.
1 Top Cryptocurrency to Buy Before It Surges 13,000%, According to MicroStrategy’s Michael Saylor was originally published by The Motley Fool
