Michael Saylor Predicted Bitcoin Will Return 30% Annually for the Next 20 Years. Here's What That Would Mean for a $10,000 Investment.

Bitcoin (CRYPTO: BTC) is well off the all-time high it set last year, but one of its biggest supporters remains bullish. Michael Saylor, co-founder and executive chairman of Strategy (NASDAQ: MSTR), appeared on "The Diary of a CEO" on Aug. 6. While discussing Bitcoin, he said, "I think it appreciates about 30% a year for the next 20 years." After that, he expects it to slow to about 20% per year.

The stock market's average return is about 10% per year, so Bitcoin would grow your money much more if Saylor is correct. That's a big if, though.

What 30% per year would mean for a $10,000 investment

If Saylor's forecast for Bitcoin is accurate, a $10,000 investment would be a millionaire-maker. After 20 years of growth at 30% per year, your investment would be worth $1.9 million.

Let's compare that to a hypothetical investment in the stock market. If you invested $10,000 for 20 years and got an average annual return of 10%, you'd end up with $67,000.

Image source: Getty Images.

The massive gap between the two results shows the value of compound growth. Since your investment is compounding each year, the difference in total returns gets wider and wider. There's a 3x difference in yearly returns between the two scenarios (30% versus 10%). Over 20 years of compounding, that stretches out to 28 times as much money.

The math isn't mathing

Although Bitcoin has had stretches when it averaged well over 30% per year, it was a significantly smaller asset at the time. In early 2020, it had a market cap of less than $200 billion. That's now $1.5 trillion at the time of this writing (Aug. 20).

For Saylor's prediction to be correct, Bitcoin would need to grow to about $285 trillion. To put that into perspective, the global gold market is estimated at about $32 trillion, and the combined market cap of all public companies worldwide is estimated at $154 trillion. Combine those, add another $99 trillion, and you have Saylor's long-term forecast for Bitcoin.

You can't take Saylor's prediction entirely at face value, either, because he has a vested interest in Bitcoin's success. Strategy is the largest Bitcoin treasury company, with over 840,000 BTC on its balance sheet. Saylor and Strategy are both betting big on the leading cryptocurrency.

Bitcoin could perform well over the next two decades, likely following its pattern of explosive growth followed by lengthy downturns. For investors who want exposure to digital assets, Bitcoin is the most established and is worth considering, either through buying the cryptocurrency itself or via Bitcoin ETFs.

It's important to go in with realistic expectations, though. Annual returns of 30% for the next 20 years are extremely optimistic and unlikely to happen now that Bitcoin's value is measured in the trillions.

Lyle Daly has positions in Bitcoin. The Motley Fool has positions in and recommends Bitcoin. The Motley Fool has a disclosure policy.