One of Bitcoin’s most dedicated investors believes the life-changing returns have just begun.
Bitcoin (BTC 3.13%) is a famously successful investment that has returned more than 10,000% over the past decade. However, the cryptocurrency is polarizing. Legendary investor Warren Buffett famously said he wouldn’t buy all the Bitcoins in the world for $25. On the other hand, there are some, including MicroStrategy Founder Michael Saylor is convinced that Bitcoin is a crucial part of the global economy.
Saylor recently gave a speech at the Bitcoin 2024 Conference where he expressed his belief that the Bitcoin price will reach $13 million per coin by 2045. That’s about 20,000% more than the current value.
Saylor isn’t just talking big: He reportedly owns about $1 billion worth of bitcoins, while his company, MicroStrategy, has amassed 226,500 bitcoins worth about $13.6 billion.
Does his bold prediction hold up? Should investors buy Bitcoin at today’s price?
Here’s what you need to know.
Is Michael Saylor’s Bitcoin price target of $13 million realistic?
Before investors get too excited about Bitcoin’s investment potential, they should understand that Saylor’s price target is remarkably optimistic. Saylor is a known Bitcoin whale, so it shouldn’t shock anyone that he’s making a bold prediction. But how much value does this prediction actually have?
Let’s do a rough calculation.
Although Bitcoin’s price is quoted in dollars, a comparison with gold can help investors understand the valuation of the two assets. The Federal Reserve can influence the dollar, but gold, like Bitcoin, is more determined by the free market. Also, like Bitcoin, it is valued globally.
If you multiply all the world’s gold, an estimated 208,874 tons, by the current spot price per ounce of $2,471, you get a total value of about $16.5 trillion. Now, the total gold supply has increased by 3% in the last year, so let’s assume (which might be generous) that it will grow at the same rate annually for the next 20 years.
That would mean that global gold inventories would be around 377,357 tons by 2045. The spot price of gold has increased by 519% over the past 20 years. For this example, I’m assuming it increases by the same amount by 2045. The resulting spot price would be $14,058 per ounce. Do the math again, and global gold inventories would hypothetically be worth $170.5 trillion in 2045.
Today, Bitcoin’s market cap, the total market value of all Bitcoins in circulation, is around $1.2 trillion. A 20,000% increase in Bitcoin’s price from current levels would push the market cap to over $241 trillion, without even considering the increase in supply between now and 2045.
Can Bitcoin displace gold as the underlying asset of the global economy? I’m not saying it’s impossible, but it’s a difficult task, and that’s probably the reality if Bitcoin is going to get that big. Investors should probably temper their expectations.
But that doesn’t mean that investors shouldn’t be excited
Remember: The great thing about aiming for the moon is that even though you can’t reach it, you can still land among the stars.
Price targets can be high or low, but they don’t change Bitcoin’s trajectory as an inflation-busting asset. Bitcoin is nothing new anymore, so it’s becoming increasingly difficult to call its investment returns a fluke. Its continuously rising value signals that society actually has demand for Bitcoin, given the U.S. dollar and other fiat currencies that are getting weaker and weaker as policymakers flood the economy with supply.
Bitcoin is still a long way from being truly useful in everyday life. In general, you can’t fill up your car with bitcoins. Still, more merchants are accepting bitcoins as payment every year, and companies and some governments are starting to accumulate bitcoins as a hedge against cash. If this continues, there’s no reason why the price of bitcoin shouldn’t continue to rise. It’s a digital asset with a fixed supply, whose price is in line with a weakening currency (the US dollar).
Is Bitcoin a buy today?
The Bitcoin price has proven to be quite volatile, so investors should avoid jumping in with both feet at once. If you want to buy Bitcoin, do as Michael Saylor does:
Buy Bitcoin on a schedule and make regular purchases to slowly build an investment at an average price over a long period of time. Sometimes you’ll buy when the price goes up and sometimes when it goes down. However, if Bitcoin maintains its current price, you’ll average out to an amount you’re happy with.
