The meteoric rise of Bitcoin (CRYPTO: BTC) may be far from over, according to Michael Saylor, executive chairman and co-founder of MicroStrategies (NASDAQ: MSTR)At the Prague Bitcoin event in June, Saylor predicted that Bitcoin could eventually reach a value of $8 million per coin.
Given Bitcoin’s current price of around $60,000, this would imply a return on investment of over 13,000%. This would equate to Bitcoin’s price skyrocketing from $450 to $60,000, a process that took nearly a decade. So it might be tempting to dismiss this bold $8 million prediction. But there are two very good reasons why Saylor might be right.
Bitcoin is the “perfect money”
Given that Bitcoin Bitcoin is a digital currency created by an algorithm. It has very specific properties that distinguish it from traditional money. First, it has a limited supply. You can’t just print more Bitcoin, like a cash-strapped government can print dollars. Only 21 million coins can exist, and the Bitcoin algorithm carefully controls the overall supply in circulation. Additionally, Bitcoin is a completely decentralized currency, meaning that no sovereign power or government can control it.
It’s these properties, Saylor explains, that help make Bitcoin a “perfect currency.” It’s anti-inflationary, making it a potential hedge against inflation. It’s a superior long-term store of value, making it an alternative to physical gold. And it’s resistant to government seizure, making it a potential safe haven asset if you live in a country with an overly authoritarian central authority.
Over time, Saylor suggests that the differences between Bitcoin and traditional currencies will become even more pronounced, leading to an influx of capital into Bitcoin-denominated assets rather than dollars. This could also lead to Bitcoin revolutionize the global financial systemas the world moves towards a new Bitcoin standard.
Admittedly, if you’re new to the world of Bitcoin, this may all sound incredibly optimistic. Indeed, Saylor—who is arguably the world’s biggest Bitcoin proponent right now—is often so unabashedly optimistic about Bitcoin’s future that some of his predictions ring hollow.
Yet it’s hard to deny that the U.S. government is running unsustainable deficits. By some estimates, the U.S. is accumulating an additional $1 trillion in debt every 100 days. At some point, people will stop buying U.S. government securities, and that’s when the “Bitcoin is the perfect currency” scenario could start to play out.
Bitcoin offers ‘corporate immortality’
Saylor is also one of the first to suggest that companies add bitcoin to their balance sheets as a treasury asset. That’s the approach taken by MicroStrategy, which launched an aggressive bitcoin buying strategy in 2020. Since then, MicroStrategy has bought so much bitcoin that it’s now the largest corporate bitcoin holder in the world—and it’s not a close race. MicroStrategy now holds more than 1% of all bitcoin, worth about $15 billion.
According to Saylor, holding bitcoin on a company’s balance sheet creates the potential for “corporate immortality.” Since the value of bitcoin will increase in perpetuity, the value of a company will also increase.
To illustrate this point, Saylor points to the last 100 years of American economic history. How many companies from 100 years ago still exist? A handful at best. In contrast, the last of Bitcoin will be mined in 2140, meaning that companies that hold significant amounts of Bitcoin today theoretically have the potential to survive for at least 100 years.
Over time, as more companies buy Bitcoin, its price will increase, due to this new buying pressure. Just keep in mind that at some point, you may have to suspend your belief for this scenario to play out. During the last Bitcoin bull rally, for example, companies like You’re here Investors were lining up to buy Bitcoin. However, this strategy didn’t work out exactly as they had planned, due to Bitcoin’s huge volatility.
“Everyone gets Bitcoin at the price they deserve”
Of course, by now you’ve probably realized that Saylor’s $8 million prediction is based more on a macroeconomic narrative about where the world is going, rather than an analytical model based on numbers. So it’s perfectly plausible that you’d decide to pass on Bitcoin as an investment opportunity. That’s perfectly normal.
But, as Saylor warns, “everyone gets Bitcoin at the price they deserve.” Saylor says he first thought about buying Bitcoin in December 2013, when Bitcoin was trading at $892. But the Bitcoin story seemed too good to be true. So he waited and waited, and finally bought Bitcoin when it was trading at $9,500. That was the price he deserved.
While I am not convinced that Bitcoin is about to hit $8 million in the near future, I am convinced that a paradigm shift appears to be occurring in the global economic order. That is why I am increasingly optimistic about Bitcoin’s ability to appreciate in value over the long term.
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Dominique Basulto has positions in Bitcoin. The Motley Fool has positions in and recommends Bitcoin and Tesla. The Motley Fool has a disclosure policy.
Top 1 Cryptocurrencies to Buy Before They Skyrocket 13,000%, According to MicroStrategy’s Michael Saylor was originally published by The Motley Fool
