In a recent statement, Michael Saylor, CEO of MicroStrategy, made an intriguing claim regarding the future price of Bitcoin (BTC). According to him, BTC will experience an average annual growth rate of 29% over the next 21 years, reaching a staggering $13 million by 2045. This bold prediction warrants careful examination to assess its validity.
Understanding Saylor’s Projection
To comprehend Saylor’s statement, let us delve into his reasoning: "Every Bitcoin you don’t buy is gonna cost you $13 million, my friend." His assertion implies that the price of BTC will continue to rise exponentially over the next two decades. It is crucial to evaluate this claim using various models and approaches.
The Rate of Adoption Model
Daniele Bernardi, founder of Diaman Partners Ltd., has developed a model known as the "Rate of Adoption" (ROA) model. This innovative approach correlates BTC’s price with the growth rate of non-zero wallets, which contain at least a fraction of Bitcoin. The ROA model was first introduced in February 2020 at the Quant Workshop Conference and has been updated since then.
Historical Accuracy: A Look Back
In 2021, Bernardi presented an update to his model, predicting a peak price for BTC of $130,000. Although this estimate fell short of the actual all-time high of $67,000 in October 2021, it demonstrated the potential of the ROA model.
Comparing Saylor’s Projection with ROA Model
Now that we have an understanding of both perspectives, let us compare their predictions. While Saylor forecasts a 29% average annual growth rate over 21 years, Bernardi’s ROA model uses a more sophisticated power law approach. This method relates the average price per wallet to the number of non-zero wallets in circulation.
Mathematical Formulation
To estimate BTC’s market capitalization, we multiply the variables derived from the power law and the average price per wallet. From this calculation, we can easily determine the expected price of BTC.
Power Law Describing BTC Trend
As illustrated below, our calculations indicate that by 2045, BTC’s price could reach $8.3 million on the median curve. On the higher curve, driven by a semi-exponential surge marking the end of each bullish cycle, it could exceed $21.6 million.
Challenges and Uncertainties
It is essential to remain aware of Bitcoin’s potential trajectory as the market is filled with individuals who settle for gains of +60% or +100%, only to exit too early and miss out on subsequent extraordinary price increases. While it is crucial to hold onto BTC for an extended period, it should not be held indefinitely.
Bitcoin ETFs: A Game-Changer?
The recent approval of Bitcoin ETFs in the United States has led to increased adoption, which we have taken into account when recalibrating our model. This development will undoubtedly impact the future price of BTC.
2025 Forecast for BTC Peak Price
Considering the effects of Bitcoin ETFs and other factors, our revised estimate for the 2025 peak price is $261,000, nearly double the previous prediction.
Current Dynamics of Bitcoin’s Price
Looking at the chart above, you will notice that even with BTC hitting all-time highs, we are still far from the upper boundary projected to mark the relative peak for 2025.
A Word of Caution
It is crucial to remember that there are no guarantees that these values will materialize. This article should not be considered investment advice, and readers are encouraged to conduct thorough research and analysis before making any investment decisions. Ideally, consult a qualified financial adviser to guide you on the appropriate allocation within your portfolio.
In Conclusion
As we navigate the complex world of cryptocurrency, it is essential to stay informed about the latest developments and predictions. While Saylor’s projection may seem ambitious, Bernardi’s ROA model offers an alternative perspective on Bitcoin’s future price. In this article, we have compared both predictions and provided a revised estimate for the 2025 peak price.
Final Thoughts
As we often say: "Everyone gets the Bitcoin price they deserve." This phrase serves as a reminder that the cryptocurrency market can be unpredictable and influenced by various factors.
About the Author
Daniele Bernardi is the founder of Diaman Partners Ltd. His expertise in financial modeling has led to the development of innovative approaches, such as the Rate of Adoption model. He regularly contributes to Cointelegraph, sharing his insights on cryptocurrency trends and market analysis.
Disclaimer
This article should not be considered legal or investment advice. The views expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.
