Michael Saylor has had quite the year. MicroStrategy (NASDAQ: MSTR), the company he co-founded roughly 35 years ago, is up more than 500% in 2024. The billionaire has also seen his net worth climb by about $1 billion, according to Fortune.
Bitcoin (CRYPTO: BTC), the world’s largest cryptocurrency, is behind Saylor’s good fortune, as MicroStrategy is its largest publicly traded holder, and Saylor also owns a lot of Bitcoin personally. While the gains have been massive, Saylor thinks the good times are just starting to roll, and believes one BlackRock index fund could rise more than 13,760% over time.
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Saylor is one of Bitcoin’s biggest bulls. MicroStrategy held the token through tougher times and is now reaping the rewards. However, Saylor sees a much brighter future for Bitcoin. In September, Saylor said he could see Bitcoin hitting $13 million by 2045.
Saylor’s logic is twofold. His first argument is that Bitcoin is only 0.1% of the world’s capital. By 2045, this number will increase to 7% of world capital, he predicts.
Saylor’s second argument concerns the growth rate of Bitcoin’s price. He said that Bitcoin has put up annual returns of 46% for the last four years. His base case assumes 29% annual returns moving forward, which is how he arrives at his $13 million target by 2045.
One exchange-traded fund (ETF) that tracks spot Bitcoin prices is the iShares Bitcoin Trust (NASDAQ: IBIT). BlackRock, the largest asset manager in the world, launched the fund earlier this year once the Securities and Exchange Commission (SEC) gave the green light for spot Bitcoin ETFs.
Spot Bitcoin ETFs attempt to mirror the price of Bitcoin by buying actual Bitcoin tokens to hold in reserve. Each ETF share is directly backed by a fraction of a Bitcoin, held in a custodial account on behalf of the fund manager. As expected, iShares Bitcoin Trust has almost exactly matched Bitcoin’s returns in 2024.
Purchasing a Bitcoin ETF helps investors avoid the operational, tax, and custody difficulties of purchasing actual tokens. ETFs have small fees investors must pay, which help cover things like marketing for the fund. The fee for iShares is 0.12% of each investor’s holdings until Jan. 11, 2025, or when iShares reaches $5 billion in assets, at which point the fee will double to 0.25%.
It’s impossible to know whether Saylor’s prediction will come true. Making price predictions is difficult for stable blue chip stocks, let alone volatile cryptocurrencies, and this price target is set more than two decades in the future. Additionally, the law of large numbers suggests that as Bitcoin’s price grows, it will be harder to realize the same incredible gains.
That said, Bitcoin certainly has some tailwinds right now. The incoming Trump administration is expected to be more friendly from a regulatory perspective and promote the crypto industry. One key will be removing the SEC’s staff accounting Bulletin-121, which currently makes it harder for banks to safeguard crypto assets, because SAB-121 requires banks to account for them as liabilities on the balance sheet.
Inflation of the dollar could also be a boon for Bitcoin, with some worried that Trump policies could reignite higher consumer prices. More and more people are viewing Bitcoin as a form of “digital gold,” which makes it more appealing as an asset to hold.
Saylor is making a bold call on Bitcoin, and, therefore on the iShares Bitcoin Trust. I’m not ready to say Bitcoin is going to $13 million per token, but I do think the cryptocurrency has a bright future. Investors should certainly get some exposure to Bitcoin in their portfolios and hold it as a long-term investment.
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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.
This BlackRock Index Fund Could Soar 13,761%, According to MicroStrategy Chief and Billionaire Michael Saylor was originally published by The Motley Fool
Source: finance.yahoo.com