MicroStrategy’s executive chairman, Michael Saylor, believes that Bitcoin (BTC) has the potential to increase in value by 1000 times from its current price of $41,500, given enough time. In a keynote published on Monday, the billionaire explained why BTC will appreciate faster than other asset classes in the long run. Saylor argued that Bitcoin is the world’s leading asset because it is scarce, desirable, portable, durable, and maintainable. He emphasized that most investment strategies, except for HODLing, do not work.
The Inflation Rate and Bitcoin’s Advantage
Saylor pointed out that the average investor earns a 2.9% return per year, outperforming the 2% consumer inflation rate. However, no major asset class can outperform the “real” monetary inflation rate, which is roughly 7-8% per year in the United States. For instance, the S&P index has merely kept up with the monetary inflation rate since 2001. In comparison, Bitcoin does not face the risk of asset devaluation caused by companies issuing new shares, making it the “apex ETF” of the future. Moreover, Bitcoin’s fixed supply of 21 million coins sets it apart from competitors like wheat, lumber, and oil, which can be produced by humans. Saylor argued that gold, Bitcoin’s biggest competitor in the commodity market, still struggles with high transportation costs and difficulties in auditing. Real estate, as a form of property, also has significant disadvantages compared to Bitcoin, such as maintenance costs, zoning risks, immobility, and illiquidity.
Beyond Traditional Investments
Saylor suggested that Bitcoin may even attract tech investors who usually invest in top-performing stocks like Apple, Amazon, and Tesla. He highlighted that Bitcoin eliminates the liability risk associated with corporations, making it a significant upgrade for investors. While stocks currently offer a 7% return year over year, Saylor predicts that Bitcoin will provide a 14% annual return once it becomes a mature asset. Looking ahead to the next 20 years, the billionaire expects Bitcoin’s growth rate to accelerate, reaching 21%+ per year as wealth is reallocated from alternative asset classes to BTC. Saylor’s calculations indicate that $1 million worth of Bitcoin today could potentially be worth $1 billion in real terms by the year 2123.
MicroStrategy’s Bitcoin Journey
Saylor’s company, MicroStrategy, is renowned for its bullish stance on BTC. Since 2020, they have accumulated over 174,000 coins. Last month, the company invested $600 million in the digital currency using funds raised through new stock issuance. As of now, their investment has increased by 37%, amounting to $2 billion in profit. MicroStrategy’s stock, MSTR, has also soared by 288% year to date. Personally, Saylor himself purchased over 17,732 BTC in 2020, which has appreciated by 320% assuming he hasn’t sold.
