The crypto sector has struggled lately, which could present a buy-the-dip opportunity.
I can’t think of anyone who has bet more on Bitcoin (BTC 7.01%), the world’s largest cryptocurrency, than Michael Saylor, the executive chairman of the Bitcoin treasury company, Strategy (MSTR 11.31%). In 2020, Saylor invested most of the company’s remaining capital to invest in Bitcoin. The decision paid off handsomely, with the stock still up over 550%, despite a 39% decline this year.
When asked about his expectations for Bitcoin, Saylor has never shied away from them. The billionaire believes the token can increase in value by just over 21,750% over time.
30% a year for the next 20 years
As recently as late October, Saylor sat down with CNBC and said that he sees Bitcoin reaching $150,000 by the end of the year, $1 million over the next four to eight years, and $20 million over the next two decades. Saylor said his $150,000 year-end price target is based on the consensus estimate of equity analysts currently covering Bitcoin. Over the longer term, he sees Bitcoin rising 30% over the next 20 years, which would take the token to $20 million, implying just over 21,750% upside from current levels.
Image source: Getty Images.
While Saylor may deviate slightly from his price targets, he has remained extremely bullish. As Bitcoin becomes less volatile, Saylor believes the token’s annual rate of return (ARR) will also decline. However, it’s had a 60% ARR, so Saylor views 30% as reasonable.
Saylor also believes further institutional adoption will significantly lift Bitcoin’s price over time. President Donald Trump’s pro-crypto policies alleviated much of the regulatory overhang on the sector, enabling institutional investors and players in the mainstream financial world to invest in and cater to the sector without worrying about regulations.
Today’s Change
(-7.01%) $-6407.77
Current Price
$84984.00
Key Data Points
Market Cap
$1694B
Day’s Range
$83989.00 – $91572.00
52wk Range
$74604.47 – $126079.89
Volume
83B
Avg Vol
0
Gross Margin
0.00%
Dividend Yield
N/A
There are now many more spot crypto exchange-traded funds (ETFs), and more traditional brokerages can offer a wider range of cryptocurrencies. Additionally, more banks are offering custody services for Bitcoin, and more players are experimenting with stablecoins. Saylor also noted that there are now 250 companies following in the footsteps of Strategy and becoming Bitcoin treasury companies that essentially tap the capital markets for funding they can use to buy more Bitcoin.
Recently, Strategy even received a B- rating from S&P Global Ratings, along with a stable outlook. Now, that’s still a non-investment-grade rating and therefore junk status. S&P Global still views the company as high risk, but Strategy is the first Bitcoin treasury company to receive a credit rating, which could even give Strategy greater access to a wider array of investors in the capital markets.
Today’s Change
(-11.31%) $-20.04
Current Price
$157.14
Key Data Points
Market Cap
$51B
Day’s Range
$155.61 – $168.35
52wk Range
$155.61 – $457.22
Volume
21M
Avg Vol
13M
Gross Margin
75.93%
Dividend Yield
N/A
Saylor is also a strong advocate for the notion that Bitcoin is a form of digital gold, which in turn lends the token’s finite supply of 21 million tokens the ability to hedge against inflation and serve as a safe haven against other concerns, such as geopolitical risk and mounting U.S. government debt. In fact, Saylor recently said, “There’s no doubt in my mind, Bitcoin will be a larger asset class than gold by the year 2035.”
A good long-term asset, but be wary of price targets
Saylor is what you would call a perma Bitcoin bull. This means that he will be bullish on Bitcoin, regardless of where it trades, whether the token is down 50% or up 1,000%. That’s why I would be cautious of these ambitious, long-term price targets, such as $20 million per token. Bitcoin is a relatively new asset, so there’s likely a lot we still don’t know, and it’s very difficult to value.
That said, I still believe investors may want some exposure to the token due to its potential to serve as a unique form of diversification. Still, it’s likely to remain volatile for the foreseeable future, so be prepared for that and have a long time horizon in mind.