The cryptocurrency market, now valued at about $4 trillion, is starting to once again win over investors. The industry is attracting capital and interest as the current presidential administration adopts a friendly stance toward digital assets.
However, there’s one cryptocurrency that continues to be a favorite among powerful and wealthy people. Just consider billionaire Michael Saylor’s take.
The tech entrepreneur has been extremely vocal about his bullishness toward Bitcoin (BTC 1.43%), even totally changing the operational blueprint of the business he co-founded, Strategy (formerly known as MicroStrategy). He thinks that the world’s top cryptocurrency will soar 17,400% from its current price of $120,000 to about $21 million in 21 years.
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Raising the price target
At the Bitcoin Conference in Nashville,Tennessee, in July 2024, Michael Saylor revealed to the world his price target for Bitcoin in 2045. The base-case scenario had the crypto getting to $13 million per unit in two decades. That view was supported by the belief that Bitcoin would bring in capital from other asset classes, like stocks, bonds, and real estate, representing more of the world’s wealth over time.
At the BTC Prague conference last month, Saylor upped his price target to $21 million by 2046. That figure represents a monster 175-fold gain from Bitcoin’s current price of $120,000. And it translates to a jaw-dropping 27.9% compound annual growth rate.
Saylor’s original thesis from last year still holds true. However, he has become even more bullish thanks to some positive developments. For example, the U.S. embracing Bitcoin, with the planned creation of a Strategic Bitcoin Reserve, is something many probably didn’t foresee. There’s also the favorable regulatory environment, with the House of Representatives recently passing the Genius Act, Clarity Act, and the CBDC Anti-Surveillance State Act.
Accumulating more Bitcoin over time
The company Saylor co-founded sells enterprise software solutions. But the billionaire changed its course after the onset of the COVID-19 pandemic.
In August 2020, Strategy bought Bitcoin for the first time for its own balance sheet. Saylor was concerned about the unprecedented level of growth happening with government debt and spending at the time, adopting the view that holding cash was a poor use of capital because it would constantly lose its purchasing power. Since then, the business has creatively raised capital in the equity and fixed-income markets to aggressively buy more Bitcoin.
As of July 22, Strategy held 607,770 Bitcoin units, valued at almost $73 billion. This makes it by far the biggest corporate holder of Bitcoin on the planet. The iShares Bitcoin Trust, an exchange-traded fund (ETF), is the only entity that holds more of the cryptocurrency than Strategy.
Saylor plans to continue buying as much Bitcoin as possible. The success of this strategy at boosting the company’s market cap has influenced other businesses to follow a similar approach, creating more demand for Bitcoin.
Bitcoin’s scarcity is a valuable trait
Bitcoin is a decentralized, purely digital network that transcends borders. It’s the oldest cryptocurrency, and it carries the highest market cap by a long shot, at $2.4 trillion, or 60% of the sector’s total value. Plus, it has a robust financial services ecosystem that supports its adoption.
However, perhaps no characteristic is as important as Bitcoin’s fixed supply cap of 21 million units. This limit is written in the network’s software. And it’s unlikely to be changed — something that the majority of nodes must agree on, because it would undermine Bitcoin’s value and probably decrease demand to own it.
The U.S. government will continue to print money to fund huge fiscal deficits. This will lead to growing federal debt, resulting in persistent currency debasement. Whether Saylor’s lofty price target becomes a reality is anyone’s guess. But investors should seriously consider allocating even a small portion of their portfolios to Bitcoin.
Neil Patel has positions in iShares Bitcoin Trust. The Motley Fool has positions in and recommends Bitcoin. The Motley Fool has a disclosure policy.
