The meteoric rise of Bitcoin (BTC -2.88%) could possibly be removed from over, based on Michael Saylor, the chief chairman and co-founder of MicroStrategy (MSTR -3.18%). On the Bitcoin Prague occasion in June, Saylor predicted that Bitcoin might finally hit a price of $8 million per coin.

Given Bitcoin’s present price of roughly $60,000, that may indicate a greater than 13,000% return on funding. That is equal to Bitcoin skyrocketing in price from $450 to $60,000 — a course of that took practically a decade. Consequently, it is likely to be tempting to dismiss this daring $8 million prediction. However there are two excellent explanation why Saylor may simply be proper.

Bitcoin is “perfect money”

On condition that Bitcoin is a digital forex created by an algorithm, it has some very particular properties that distinguish it from conventional cash. For one, it has a finite provide. You’ll be able to’t simply print extra Bitcoin, the best way a cash-strapped authorities can print {dollars}. Solely 21 million cash can ever exist, and the Bitcoin algorithm fastidiously controls the general circulating provide. Furthermore, Bitcoin is a totally decentralized forex, which means that no sovereign energy or authorities can management it.

It is these properties, says Saylor, that assist to make Bitcoin “perfect money.” It’s anti-inflationary, making it a possible hedge towards inflation. It’s a superior long-term retailer of worth, making it a substitute for bodily gold. And it’s proof against authorities seizure, making it a possible secure haven asset for those who dwell in a rustic with an overreaching central authority.

Over time, Saylor means that the variations between Bitcoin and conventional currencies will turn into even starker, and that may result in capital flowing into property denominated in Bitcoin somewhat than {dollars}. It may additionally result in Bitcoin revolutionizing the worldwide monetary system, because the world strikes to a brand new Bitcoin normal.

Admittedly, for those who’re new to Bitcoin, all of this may sound extremely optimistic. Certainly, Saylor — who’s arguably the highest-profile Bitcoin bull on this planet proper now — is commonly so relentlessly bullish about the way forward for Bitcoin that a few of his predictions ring hole.

But, it is exhausting to disclaim that the U.S. authorities is operating unsustainable deficits. By some estimates, the U.S. is including $1 trillion in new debt each 100 days. Sooner or later, individuals are going to cease shopping for U.S. authorities debt, and that is when the “Bitcoin is perfect money” situation may begin to play out.

Bitcoin provides “corporate immortality”

Saylor can be on the forefront of suggesting that firms add Bitcoin to their stability sheets as a treasury asset. That is the strategy pioneered by MicroStrategy, which began an aggressive Bitcoin shopping for technique in 2020. Since that point, MicroStrategy has purchased a lot Bitcoin that it’s now the most important company holder of Bitcoin on this planet — and it is not an in depth race. MicroStrategy now holds over 1% of all Bitcoin, price roughly $15 billion.

In keeping with Saylor, holding Bitcoin on a company stability sheet creates the potential for “corporate immortality.” For the reason that worth of Bitcoin will improve in perpetuity, so will the worth of an organization.

For example this level, Saylor factors to the final 100 years of U.S. financial historical past. What number of firms nonetheless exist from 100 years in the past? A handful at finest. In distinction, the ultimate sliver of the final Bitcoin shall be mined within the 12 months 2140, so firms that maintain vital quantities of Bitcoin at this time theoretically have the potential to dwell for at the least 100 years.

Over time, as extra firms purchase Bitcoin, the upper its price will go, on account of this new shopping for strain. Simply take into account that, at a sure level, you could have to droop perception for this situation to play out. Over the past Bitcoin bull market rally, for instance, firms like Tesla had been lining up to purchase Bitcoin. Nevertheless, that technique hasn’t precisely labored out the best way they thought it could, on account of Bitcoin’s monumental volatility.

“Everybody gets Bitcoin at the price they deserve”

Clearly, at this level, you’ve got in all probability realized that Saylor’s $8 million price prediction relies extra on a macro narrative about the place the world is headed, somewhat than a numbers-driven, analytical mannequin. So it is completely believable that you simply may determine to cross on Bitcoin as an funding alternative. Honest sufficient.

However, as Saylor warns, “Everybody gets Bitcoin at the price they deserve.” Saylor says he first thought of shopping for Bitcoin in December 2013, when it was buying and selling at $892. However the Bitcoin story simply appeared too good to be true. So he waited and waited, and at last purchased Bitcoin when it was buying and selling at $9,500. That was the price he deserved.

Whereas I stay unconvinced that Bitcoin is about to hit a price of $8 million anytime quickly, I’m satisfied that there seems to be a paradigm shift happening within the world financial order. For that cause, I am rising more and more bullish on Bitcoin’s skill to rise in worth over the long run.