1 Top Cryptocurrency to Buy Before It Rises Up to 23,000% According to MicroStrategy’s Michael Saylor

Feel like you’ve missed the boat they’re on? Bitcoinhis (CRYPTO: BTC) meteoric rise? If Michael Saylor is to be believed, you might be in luck. Saylor, the steadfast head of the business intelligence company MicroStrategy (NASDAQ: MSTR)is known for bold, often controversial approaches and likes to make mind-boggling Bitcoin predictions.

His last statement? Bitcoin, which is around $56,000 today, could be worth as much as $13 million by 2045. That’s about a 23,100% gain from today — not a bad return. So is this reasonable? Is now the time to buy?

Michael Saylor’s Bull Case Bitcoin Prediction Is Based On His Belief That Bitcoin Is “The World’s First Perfect Money”

Modern currency is inflationary. It might sound bad, but it’s designed to be that way. The idea is that if the currency loses value over time, people will prefer to spend or invest it rather than hoard it. If a dollar is worth less next year, why hold it?

If however that dollar became More worth a year from now — that would be a deflationary currency — why wouldn’t I put it under the couch? I’d be richer if I did absolutely nothing, right? If everyone shoved their money under the couch, it would slow down the economy because money wouldn’t be changing hands.

This is a highly simplified version of the kind of economics that most modern governments ascribe to, but Saylor — and most of the Bitcoin faithful — is highly skeptical of this system. The basic thesis is that governments are unable to keep inflation under control, and as time goes on this money becomes not just a little less valuable — as it is intended to do — but mostly worthless, conjuring images with people pushing wheelbarrows with cash to buy. a loaf of bread

Its “perfect money,” Bitcoin, blurs the line between asset and cash, becoming more valuable over time, but still easily spent due to its digital nature.

This purest Bitcoin argument is certainly an interesting idea and one that is not without merit, but it is rooted in a fundamental distrust of our modern economic system. I can’t say I agree. However, you don’t have to buy into this theory entirely to see that Bitcoin has some unique characteristics that make it a good store of value.

A Bitcoin price target of $13 million is optimistic to say the least

Is Saylor’s bull case price target of $13 million over 21 years reached? Let’s look at some numbers.

First, note that MicroStrategy says it is “the world’s largest corporate holder of Bitcoin,” valued at $15 billion. So the company and Saylor — who owns 10 percent of the company and probably still owns a lot of Bitcoin — benefit when the price of Bitcoin goes up. So Saylor has a vested interest in building cryptocurrency optimism.

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Looking the other way, it took about nine years for Bitcoin to grow 24,000% to its current level. Take a look at this graph of Bitcoin’s growth over that period compared to S&P 500 — a useful proxy for the broader market as a whole — as context. The scale of Bitcoin consent is quite staggering, growing at an annual rate of over 80%.

Saylor’s prediction would be the same gain, but in more than twice as much, resulting in an annualized growth rate of much less than 30%. We know that the S&P, on the other hand, has returned just over 10% annually since its inception in the 1950s — of course, there have been plenty of individual years when it’s returned much more or much less, but that’s the average saddle. . Expecting to beat the market by 20 percentage points every year for 20 years is a tall order.

OK, you might think the S&P is a bad benchmark — after all, Bitcoin has certainly left it in the dust by this point — and you might be right. I mean, all you have to do is look at the chart above. But here’s the thing, I think as Bitcoin matures and more institutional money comes in, its ability to provide returns completely divorced from more traditional investments will diminish.

The correlation between the stock market and Bitcoin from 2009 through most of the 2010s was close to 0; there is no relationship. However, from 2020 to 2023, that correlation number was between 0.2 and 0.75 (1 being perfectly correlated). Of course, this can go back to 0 at any time, but I don’t think it’s a coincidence that 2020 and 2021 were when many large institutions started to seriously invest in Bitcoin.

Let’s look at it another way, the total Bitcoin market is worth about $1 trillion today. The total stock market is north of $100 trillion, so Bitcoin is only worth 1%. Assuming a 10% growth rate, global equities will be worth $740 trillion in 2045, while the total Bitcoin market — using Saylor’s prediction — would be worth nearly $250 trillion. Bitcoin would go from less than 1% to 34% of global shares.

I think this is too high a target. This is a complete paradigm shift; Bitcoin would not be worth just 34% of stocks, it would be worth 200% of global gold, up from today’s 6% mark. In fact, it would be worth more than any asset class worldwide except stocks, real estate and bonds. Yes, Bitcoin went from $0 to $1 trillion in 15 years, but right now, it’s still a somewhat minor player in global investing. The best bull case would be a far more fundamental reordering of global capital than what we’ve seen so far.

I think Bitcoin will undoubtedly beat the market for years to come. Indeed, I think we will see at least an annualized return of 30% or more for some time. However, I don’t think this will last 20 years like Saylor does. I certainly admit that I could be wrong, but I think aiming for a more reasonable long-term growth rate is a smart move. If, say, Bitcoin rose to 5% of global stocks by 2045, you’d still return an average of 19% per year.

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Johnny Rice has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bitcoin. The Motley Fool has a disclosure policy.

1 Top Cryptocurrency to Buy Before It Rises 23,000% According to MicroStrategy’s Michael Saylor was originally published by The Motley Fool