Michael Seiler, Chief Executive Officer Microstrategy (NASDAQ: MSTR)a company specializing in business intelligence software. However, MicroStrategy is known as the first company to go public Bitcoin (CRYPTO: BTC) as its primary reserve asset, and recently rebranded itself as a “Bitcoin Development Company”.
MicroStrategy owned 226,500 bitcoins as of July 31, which is currently worth more than $13 billion. Therefore, buying MicroStrategy stock is equivalent to buying Bitcoin. The company’s market value is $25 billion, and a significant portion of that value comes from its Bitcoin reserves.
Silver recently gave a keynote speech at the Bitcoin Conference in Nashville, Tennessee, during which he shared his 20-year vision:
“What do I think is going to happen? Well, I have a bear case and a bull case. But what I think is going to happen is that 55% [compound annual growth rate in Bitcoin] It goes to 50%, 45%, 35%, 30%, 25%, 20%. It is between 50 and 20 percent. It gradually decreases until it grows about twice as fast as growth S&P 500 Index and at this rate, Bitcoin will be $13 million per coin in 2045. $13 million! It could be a $3 million bear case and a $49 million bull case.”
Bitcoin is currently trading at $58,000 per coin. Thus, Silver expects the cryptocurrency to return between 5,170 and 84,380 percent by 2045. Here’s what investors need to know.
Spot Bitcoin ETFs can unlock significant demand for Bitcoin
The investment thesis for Bitcoin is simple supply and demand. Bitcoin’s supply is limited to 21 million coins, so demand is the most important variable. In other words, Bitcoin will have an increasing value as long as demand continues to rise over time. And Michael Silver believes that the recent adoption of spot bitcoin ETFs will increase demand by bringing more investors into the market.
“There’s been 10 years of pent-up demand. People have been waiting for these ETFs and finally mainstream investors can get access to bitcoin,” Siler told CNBC in February. This asset has found its place and people are now realizing that the demand for Bitcoin through these ETFs is 10 times greater than the supply from the natural sellers, which are the miners.
Traditionally, investors have had to go through cryptocurrency exchanges to receive bitcoins, typically incurring high fees per transaction. But spot bitcoin ETFs can unlock significant demand from retail and institutional investors by reducing this friction. Investors no longer need a separate account with a cryptocurrency exchange, but can add bitcoins to existing brokerage accounts.
Additionally, investors no longer need to pay exorbitant transaction fees as many bitcoin ETFs are cheaper. For example, iShares Bitcoin Trust carries Cost ratio 0.25%, which means the annual fee for a $10,000 portfolio would total $25. but Coinbase For orders under $10,000, it charges 0.4% to 0.6% per transaction. In that scenario, investors face higher fees twice: once when buying and once when selling.
Spot Bitcoin ETFs broke all kinds of records after being approved in January. iShares Bitcoin Trust and Wise Origin Bitcoin Trust During its first 50 trading days, it accumulated more assets than any ETF in history, according to Bloomberg’s Eric Balchunas. Additionally, according to the Wall Street Journal, the iShares Bitcoin Trust reached $10 billion in assets faster than any ETF in history.
History says Bitcoin will be worth more in the next four years
Bitcoin halving events refer to the 50% reduction in block subsidies that occur approximately every four years. To explain further, miners are rewarded with newly minted bitcoins (called a block grant) by solving the cryptographic puzzle required to validate a group of transactions (called a block). But every time 210,000 blocks are added to the blockchain, the payout is cut in half, which takes about four years.
The last halving event occurred in April 2024, when the block subsidy decreased from 6.25 BTC to 3.125 BTC. Halving events is important for two reasons. First, they are the mechanism by which the 21 million bitcoin supply limit is enforced. Second, they reduce selling pressure because miners are mining fewer bitcoins, so they have fewer bitcoins to sell.
Importantly, Bitcoin has always increased in value between one halving event and the next, as illustrated in the chart below.
|
Bitcoin halving |
Half price |
Price in the next half |
return |
|---|---|---|---|
|
November 2012 |
$12 |
$647 |
5,291% |
|
July 2016 |
$647 |
8821 dollars |
1,263% |
|
May 2020 |
8821 dollars |
$63,462 |
619% |
Data source: Morgan Stanley, YCharts.
In short, history says that Bitcoin will be worth more than $63,462 when the 2028 halving event begins. In the past, returns between halving events got smaller with each subsequent event, but access to spot bitcoin ETFs could break this pattern simply because that variable was not present in previous halving events. In other words, Bitcoin could theoretically return more than 619% in the 2028 halving event.
Saylor’s goals range from wildly optimistic to absurd, but investors should still consider buying Bitcoin.
Time to check the reality of Saylor’s $3 million bear case target, and his $49 million bull case price target looks downright absurd. But I would have said the same thing about the $58,000 price target in 2010 (when Bitcoin was trading below $1). Lo and behold, almost 15 years later, Bitcoin is worth $58,000. So I was wrong.
This does not mean that Bitcoin will reach $3 million (or $49 million). But Bitcoin clearly has the potential to create significant wealth, so patient investors who are comfortable with volatility should consider taking a small position. Even if Bitcoin only returns 100% in the coming years, this could be a significant change.
However, comfort with volatility is key. Bitcoin has fallen by more than 50% on several occasions, and similar declines are likely in the future. In addition, smaller reductions are common. For example, the digital currency is currently trading 20% below its record high. Anyone not bothered by this information should consider buying a small position in Bitcoin today, either directly or through a Bitcoin ETF.
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Trevor Jennewine has no position in any of the stocks listed. The Motley Fool has and recommends positions in Bitcoin and Coinbase Global. The Motley Fool has a disclosure policy.
According to Michael Siler, 1 cryptocurrency was first published by The Motley Fool before it surged by 84,380%.