Bitcoin (CRYPTO: BTC), the world's largest cryptocurrency, has been on a great run this year and has roughly doubled -- 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 just be getting started, according to MicroStrategy Executive Chaiman and billionaire investor Michael Saylor, who says he thinks the token is going to soar.
In September, Saylor, a perennial Bitcoin bull, said on CNBC he thinks Bitcoin could hit $13 million by 2045, which implies 16,939% upside from its current price (as of Nov. 9) of roughly $76,296:
Saylor also pointed out that Bitcoin has had an annual rate of return (ARR) of 46% for the past four years, which is why he is assigning a risk-free return of 50%. He said his central case forecasts 29% annual returns for Bitcoin during the next two decades.
Saylor has every reason to be bullish. His company MicroStrategy, whose stock has soared roughly 400% this year, is the largest public owner of Bitcoin, holding 1% of all tokens outstanding.
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 equity 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 buy more Bitcoin as a Treasury reserve asset in a manner that will allow us to achieve higher BTC yield."
I don't know if $13 million for Bitcoin can ever happen. Bitcoin is still an incredibly volatile asset, and I think price predictions for Bitcoin are somewhat meaningless, especially those made two decades in advance. However, I think Bitcoin has several tailwinds that could propel it higher.
With the election over, Bitcoin and the entire crypto industry may get some regulatory relief. The new administration may take a different approach and institute new leadership at the Securities and Exchange Commission (SEC).
SEC Chairman Gary Gensler has not been a friend of crypto. Not only does he seek to have more regulatory jurisdiction over crypto, but an SEC memo of his known as SAB-121 makes it difficult for banks to hold Bitcoin as a custodian because they have to include these assets on the balance sheet, which increases their capital and liquidity requirements. The potential removal of SAB-121 would make more financial institutions willing to custody Bitcoin.
Additionally, Bitcoin has caught on as a hedge against inflation. Recently, BlackRock's CEO Larry Fink called Bitcoin an alternative to gold. He also said this belief will become even more commonplace "if we can create more acceptability, more transparency, [and] more analytics related to these assets." While inflation has come down, many expect the environment to remain inflationary long term due to fiscal spending and an unsustainable national debt situation.
Finally, interest rates are forecast to drop further, making riskier assets like Bitcoin more appealing because safer assets like U.S. Treasury bills and bonds yield less and are less likely to keep up with inflation.
No one knows if Bitcoin will hit Saylor's target years from now, but there are signs that several forces are converging that seem bound to drive up Bitcoin's price.
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Bram Berkowitz has positions in Bitcoin. The Motley Fool has positions in and recommends Bitcoin. The Motley Fool has a disclosure policy.