The Bitcoin Paradox: Will Saylor’s Prediction Come True?

As the CEO of MicroStrategy, Michael Saylor has been a vocal advocate for Bitcoin (BTC) and its potential for growth. Recently, he made an intriguing statement regarding the cryptocurrency’s future value. According to Saylor, Bitcoin will grow at an average annual interest rate of 29% over the next 21 years, reaching a value of $13 million by 2045. But is this prediction based on solid analysis, or is it simply a bold claim? In this article, we’ll delve into the details of Saylor’s statement and compare it to our own model for predicting Bitcoin’s price.

The Rate of Adoption Model

Those who have followed me are familiar with the "Rate of Adoption" model. This model correlates Bitcoin’s price to the growth rate of ‘non-zero’ wallets, which are wallets containing at least a fraction of Bitcoin. I first presented this model in February 2020 at the Quant Workshop Conference, organized by Diaman Partners Ltd. The model predicted the 2021 peak at $63,000, slightly below the all-time high of $67,000 in October 2021.

In 2023, I updated the model and published the results in Cointelegraph. The prediction for the current cycle was $130,000, a price Bitcoin will soon reach. With the approval of Bitcoin ETFs in the United States and 11 companies simultaneously promoting such an instrument, it’s clear that the parameters have changed. I had planned to recalculate the model in autumn 2024, and here we are.

Recalculating the Model

With the recalibrated model, I am ready to estimate Bitcoin’s price in 2025 before it likely enters the next crypto winter in the autumn and winter of 2025. I compared Saylor’s projection to our model before giving a short-term prediction. He predicts an average annual return over the next 21 years, while our model uses a more sophisticated power law. This approach relates the average price per wallet to the number of non-zero wallets in circulation. The multiplication of these variables provides the expected market capitalization of Bitcoin, from which it’s easy to derive the price.

Power Law and Market Capitalization

The price of Bitcoin and its power law describing its trend over time. Our calculations indicate that by 2045, Bitcoin’s price could reach $8.3 million on the median curve. On the higher curve, driven by the semi-exponential surge marking the end of each bullish cycle, it could exceed $21.6 million.

It is key to remain aware of Bitcoin’s potential trajectory, as the market is filled with individuals who settled for gains of +60% or +100%, only to exit too early and miss out on subsequent, extraordinary price increases. I’m not suggesting holding Bitcoin indefinitely, as Saylor advocates. Still, it should undoubtedly be held for as many years as possible, or at least until it becomes clear that it will be replaced by something more attractive and functional (which, as of today, does not exist).

Projected Relative Peak for 2025

Now, let’s move on to the projected relative peak for 2025 based on the Rate of Adoption model, particularly considering the increased adoption driven by Bitcoin ETFs. The 2025 forecast for Bitcoin’s peak price is $261,000, nearly double the previous estimate.

Current Dynamics and Potential Trajectory

Of course, there are no guarantees that these values will materialize, nor should this be considered investment advice. I always recommend conducting thorough research and analysis before making any investment decisions, ideally with a qualified financial adviser who can guide you on the appropriate allocation within your portfolio. It is crucial to understand the dynamics and potential of Bitcoin thoroughly. Otherwise, it may always seem too expensive to buy.

Looking at the chart above, you’ll notice that even with Bitcoin hitting all-time highs, we are still far from the upper boundary projected to mark the relative peak for 2025. I’ll leave you with a particularly insightful phrase:

Everyone Gets the Bitcoin Price They Deserve

This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

Investment Implications and Conclusion

In conclusion, while Saylor’s prediction is bold and intriguing, it’s essential to analyze the underlying assumptions and methodology behind his claim. Our own model, which correlates Bitcoin’s price with the growth rate of ‘non-zero’ wallets, provides a more nuanced understanding of the cryptocurrency’s potential trajectory.

As we approach 2025, investors should remain cautious but also aware of the potential for significant price movements in the cryptocurrency market. With the approval of Bitcoin ETFs and increased adoption, it’s essential to understand the underlying dynamics driving the market.

Ultimately, whether or not Saylor’s prediction comes true remains to be seen. However, one thing is certain: the world of cryptocurrencies is inherently unpredictable, and investors must remain vigilant and adaptable in order to navigate its complexities.

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