Michael Saylor made waves when he announced in August 2020 that the software enterprise he co-founded, MicroStrategy, bought Bitcoin (BTC -1.37%) to hold on its balance sheet. After numerous other purchases and a complete overhaul of the company's strategy, this is the biggest corporate holder of the digital asset on planet Earth.
It's not a shock to learn that Saylor is incredibly optimistic about Bitcoin's future. In fact, he believes the world's top cryptocurrency will soar 12,521% during the next 20 years to $13 million per coin. Continue reading to learn more about this lofty projection.
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All Saylor sees is Bitcoin
As of this writing, Bitcoin's price is almost $104,000. The cryptocurrency has thus far had a volatile year, but it has been surging in the past few weeks. It's trading at only 5% off its record high from January.
There are much bigger numbers on the horizon. At least that's what Michael Saylor thinks. In his base case scenario, he sees Bitcoin reaching $13 million per coin, which would translate to an unbelievable 126-fold gain. This equates to a compound annual rate of about 27%, which would undoubtedly outperform every other asset class.
Saylor's thesis is simple. Over time, his view is that more of the world's wealth, whether it's tied up in bank accounts, equities, bonds, real estate, commodities, or collectibles, will move to Bitcoin. The base case calls for a 7% allocation by asset managers to the crypto by 2045, compared to significantly less than 0.5% today.
The bear case has Bitcoin reaching $3 million, while the bull case forecasts a monster $49 million price target. Again, the key variable for Saylor is the amount of wealth that eventually finds its way to Bitcoin.
Regardless of what price target is believable, it's obvious that Saylor is perhaps the most bullish Bitcoin supporter out there. His firm currently owns almost 570,000 Bitcoin units, making it the largest public holder. MicroStrategy has morphed into a Bitcoin treasury business, opportunistically raising capital in the debt and equity markets to finance Bitcoin purchases. He's clearly all in.
Bitcoin's fixed supply can't be overlooked
When Saylor and his business first purchased Bitcoin nearly five years ago, the thinking was pretty straightforward. Instead of holding cash and cash equivalents, which were sure to lose value due to the unprecedented level of monetary stimulus pumped into the economy after the onset of the COVID-19 pandemic, why not own something that has a fixed supply cap? Naturally, Bitcoin was the solution.
The supply of fiat currencies, particularly the U.S. dollar, has climbed rapidly since the Great Recession of 2007-2009. On the other hand, Bitcoin has a hard cap of 21 million coins. This limit is etched in the software, and it's the cryptocurrency's most important characteristic. As demand rises for something that has a fixed supply, so does the price. We've seen this happen.
Since MicroStrategy's first bought Bitcoin in August 2020, Bitcoin's price has soared 795%. It wouldn't be a surprise at all to see other companies that have seemingly no ties to Bitcoin start allocating some of their cash to the digital asset. It helps that there is a growing financial ecosystem out there to support Bitcoin adoption.
Now that Bitcoin is slowly approaching its all-time high again, investors might be wondering if it's too late to get in on the action. To be clear, I don't think that it is. Saylor and his company remain buyers, for one.
And given that Bitcoin still represents such a tiny fraction of all the wealth out there, I believe there is meaningful upside for investors who can buy and hold for at least 10 years.
