Bitcoin (CRYPTO: BTC)The world’s largest cryptocurrency, has had a tremendous run this year, roughly doubling – well ahead of the bull market and hitting new all-time highs. The token has benefited from the creation of spot Bitcoin Exchange-Traded Funds (ETFs), lower interest rates, and a growing view that the token could be a hedge against inflation.
However, Bitcoin may be just getting started, says MicroStrategy Executive chairman and billionaire investor Michael Saylor, who says he thinks the token will soar.
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In September, Saylor, a perennial Bitcoin bull, said on CNBC that he thinks Bitcoin could reach $13 million by 2045, implying a 16.939% increase from the current price (as of November 9) of around $76,296:
My long term prediction is that [Bitcoin’s] going to $13 million in 21 years… Bitcoin is currently 0.1% of the world’s capital – I think it’s going to 7% of the world’s capital.
Saylor also pointed out that Bitcoin has achieved an annualized rate of return (ARR) of 46% over the past four years, which is why he uses a risk-free rate of return of 50%. He said his central case predicts a 29% annual return for Bitcoin over the next twenty years.
Saylor has every reason to be optimistic. His company MicroStrategy, whose shares are up about 400% this year, is the largest public owner of Bitcoin, owning 1% of all outstanding tokens.
Saylor is also putting his money where his mouth is. MicroStrategy recently announced plans to raise $42 billion over the next three years, half through stock sales and half through debt. The proceeds will be used to buy more Bitcoin.
MicroStrategy President and Chief Executive Officer Phong Le said in the company’s recent earnings release: “As a Bitcoin Treasury Company, we plan to use the additional capital to purchase more Bitcoin as Treasury reserve in a manner that will enable us to obtain higher Reach BTC values. yield.”
I don’t know if $13 million for Bitcoin can ever happen. Bitcoin is still an incredibly volatile asset, and I think Bitcoin price predictions are somewhat meaningless, especially those made twenty years in advance. However, I think Bitcoin has several tailwinds that could push it higher.
Now that the election is over, Bitcoin and the entire crypto industry could get some regulatory relief. The new administration could take a different approach and install new leadership at the Securities and Exchange Commission (SEC).
SEC Chairman Gary Gensler has not been a friend of crypto. Not only is he seeking more regulatory jurisdiction over cryptocurrencies, but an SEC memo from him known as SAB-121 makes it difficult for banks to hold Bitcoin as custodian because they must include these assets on their balance sheets, which their opportunities increase. capital and liquidity requirements. The possible removal of SAB-121 would ensure that more financial institutions are willing to take custody of Bitcoin.
Furthermore, Bitcoin has proven to be a hedge against inflation. Recently, BlackRockCEO Larry Fink called Bitcoin an alternative to gold. He also said that this belief will become even more common “if we have more acceptability, more transparency, [and] more analysis related to these assets.” Although inflation has fallen, many expect the environment to remain inflationary in the long term due to budget spending and an unsustainable public debt situation.
Finally, interest rates are expected to fall further, making riskier assets like Bitcoin more attractive because safer assets like US Treasuries and bonds yield less and are less likely to keep up with inflation.
No one knows whether Bitcoin will reach Saylor’s target several years from now, but there are signs that several forces are coming together that will likely drive Bitcoin’s price higher.
Consider the following before buying shares of Bitcoin:
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Bram Berkowitz 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 16,939%, According to MicroStrategy Chief and Billionaire Michael Saylor, was originally published by The Motley Fool
