Although Bitcoin(CRYPTO: BTC) is sitting as of this writing almost 25% below its all-time high of $73,750 reached earlier this year, there are plenty of bullish crypto investors who are still convinced that Bitcoin will skyrocket over the long run. Among them is Michael Saylor, founder and executive chairman of MicroStrategy(NASDAQ: MSTR), who recently doubled down on his prediction that a single Bitcoin would be worth $13 million by the year 2045.
At last report, MicroStrategy owned 226,500 Bitcoins with a market value around $14 billion. It touts itself as “the largest corporate holder of bitcoin and the world’s first bitcoin development company.” Bloomberg reported last month that Saylor himself owns about $1 billion worth of Bitcoins.
Based on Bitcoin’s recent price of $55,000, a $13 million target represents an astronomical 23,000% return if you buy today and hold for the next two decades. Obviously, a lot has to happen for that to become a reality. Let’s take a closer look.
Bitcoin’s long-run performance
Yes, seeing a $13 million price tag for Bitcoin can induce a fair amount of sticker shock. But if you dig into the numbers, the math actually starts to make sense. And a lot of that has to do with the compounding power of money. If any asset is allowed to compound in value for a long period of time, the results have the potential to shock.
In the case of Bitcoin, it would require a compound annual growth rate (CAGR) of 30% for the magic to happen and it to jump from $55,000 now to $13 million in 2045. In other words, if Bitcoin can increase in value by 30% per year, for the next 21 years, an upfront investment of $55,000 would turn into $13 million.
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And, while it may be unlikely, a CAGR of 30% for Bitcoin is not out of the question. From 2011 to 2021, Bitcoin delivered annualized returns of 230% per year. And Bitcoin returned approximately 150% in 2023. Already this year, Bitcoin is up more than 30%. Over the past five years, the only blemish was 2022, when Bitcoin fell nearly 65%.
So what can investors realistically expect? In an interview this month with CNBC, Saylor predicted that during the next two decades, Bitcoin’s annual return would steadily fall over time, from about 44% a year to 40% to 35% to 30% to 25% to… well, you get the idea. The final long-run number for Bitcoin, says Saylor, would be the annual return of the S&P 500 plus an extra 8% to compensate investors for the extra risk.
At some point, of course, it’s worth taking a moment to ponder what a price tag of $13 million really means for Bitcoin. Based on its current circulating coin supply of 20 million, that implies a future market cap of $260 trillion. That dwarfs the value of any tech stock today, and in fact, it dwarfs the value of the entire S&P 500, which today sits at around $45 trillion.
Even if we assume that U.S. stocks will grow at a rate of 10% per year over the next 20 years, a price tag of $13 million still implies that Bitcoin would represent an astonishing amount of the world’s wealth in the year 2045. For that reason alone, it’s worth having a healthy dose of skepticism about Bitcoin’s future price trajectory.
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Bitcoin as an asset class
For much of its history, Bitcoin has been uncorrelated with any major asset class, and that has made it very unique from a risk diversification perspective. Quite simply, Bitcoin can zig when other assets zag.
Image source: Getty Images.
Thus, Bitcoin is growing in favor with billionaire hedge fund managers, who increasingly view it as a way to hedge risk. In some cases, that risk might be economic, such as the risk of inflation. In other cases, that risk might be geopolitical. In the CNBC interview, Saylor uses the example of missile strikes to illustrate this point. What do you do as an investor if you wake up one morning and hear that there have been missile strikes somewhere in the world?
Until recently, the answer to that question might have been: Buy gold. But there is growing popularity in the notion that Bitcoin is “digital gold.” Some investors are buying Bitcoin, and not gold, as a hedge against worst-case scenarios popping off around the world. It sounds surprising, but Bitcoin might actually be a safe haven asset.
All of which is to say: The more that Bitcoin can cement its status as a valuable, stand-alone asset class, the more likely it is that its price could skyrocket during the next two decades. That’s because investors will be willing to allocate a greater and greater share of their portfolio to it.
Risk factors
Of course, there are several factors that could derail Bitcoin during the next two decades. For example, if Bitcoin’s annual returns decline significantly for an extended period of time, investors might just decide that they can get the same type of return, while taking on much less risk, simply by buying hot tech stocks.
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Or, even worse, the U.S. political and regulatory establishment might shift against Bitcoin. For example, there might be a crackdown on Bitcoin mining, given the concerns over its environmental impact. Or, regulators in the U.S. might decide to ban Bitcoin entirely, as they’ve done in China and other nations. At the very least, the government could make things difficult for Bitcoin owners simply by making a few quick changes to the U.S. tax code.
That said, I remain bullish on Bitcoin’s long-term prospects. As long as it continues to deliver anywhere close to the type of performance that it has delivered over the past decade, investors are likely to be very pleased at Bitcoin’s valuation 20 years from now, even if it’s nowhere close to the astronomically high valuation predicted by Michael Saylor of MicroStrategy.
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Dominic Basulto has positions in Bitcoin. The Motley Fool has positions in and recommends Bitcoin. The Motley Fool has a disclosure policy.
This Cryptocurrency Could Soar by 23,000% Over the Next 2 Decades, According to MicroStrategy’s Michael Saylor was originally published by The Motley Fool
Here’s why Ripple’s success might not translate to XRP gains over the next five years.
XRP(XRP 1.55%), now hovering just below $1.50, deserves credit for having genuine utility in a market filled with meme coins and outright frauds. Created by Ripple, the token was designed to enable faster, cheaper transactions between financial institutions, especially across borders.
Partnerships with major banks, like Bank of America and Santander, show Ripple is doing something right.
So, where will XRP be in five years?
Image source: Getty Images.
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There’s a key difference in Ripple’s products
The bull case has always been simple: The banking system’s adoption of Ripple’s technology will drive XRP demand. But in my view, this misunderstands how banks actually use — or don’t use — Ripple’s products.
Ripple offers two core products. Though they’ve been recently unified as features under the umbrella of “Ripple Payments,” I’ll use their former names for clarity.
RippleNet is a settlement system that allows for faster and cheaper transactions, improving on legacy systems. But it is essentially a messaging service, and banks typically use it without ever touching XRP. This is the service the big-name banks like Bank of America have experimented with or adopted.
On-Demand Liquidity (ODL), on the other hand, actually uses XRP as a “bridge asset” for cross-border transactions. When, say, sending funds from a bank in the U.S. to a bank in France, ODL converts the dollars to XRP and then into euros.
Bulls argue that growing ODL adoption will drive demand for XRP, but this doesn’t hold up — at least enough to move the needle — for two reasons:
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ODL serves smaller institutions facing liquidity constraints like fintechs and remittance providers, not major banks. It’s a relatively niche product that caps transaction volume growth.
Institutions immediately convert in and out of XRP. Each buy order is instantly matched with a sell order, meaning the bulk of global volume doesn’t create any sustained demand.
Stablecoins could pose a threat
And there’s another wrinkle: Stablecoins have quickly found a footing within traditional finance and banking systems, making them more efficient while providing more stability than XRP. And with recent legislation, their role within the system is only likely to grow.
Ripple recognizes this. That’s why Ripple has undergone a rebranding and made several key acquisitions, including the $200 purchase of RAIL. It’s clear Ripple wants its own stablecoin, RLUSD, to be a major player in the industry. Ripple’s own website now prominently features “integrate stablecoin payments into your business.”
That’s a problem for XRP’s value. RLUSD can function as an alternative bridge asset in ODL transactions and erode its already limited demand pressure.
Is XRP a buy going forward?
In five years, Ripple will likely be a thriving payments infrastructure company, even more so than today. RLUSD will probably have gained meaningful traction as a bridge asset for cross-border transfers.
But even if Ripple’s products genuinely transform cross-border banking, I don’t think XRP holders will benefit from it. In five years, I see it having struggled to keep up with the rest of the market — or worse.
X is reportedly set to allow users to trade socks and cryptocurrencies on their timelines.
That’s according to a report Sunday (Feb. 15) from Coindesk, which characterizes this development as part of the Elon Musk-headed social media platform’s widening push into the financial services space.
The new features will include “Smart Cashtags,” the report added, citing comments from Nikita Bier, X’s head of product. These will let users interact with ticker symbols in posts and carry out trades from the app.
As Coindesk noted, the announcement is happening as the company is preparing to launch an external beta of its payments system. Musk said X Money is being tested in-house and will be available to a limited user group within a month or two.
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Musk has touted this as part of his vision for X becoming an “everything app,” allowing users to manage the bulk of their digital activity from one platform.
“You’ll be able to come to X and be able to transact your whole financial life on the platform,” former X CEO Linda Yaccarino told the Financial Times last year.
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“And that’s whether I can pay you for the pizza that we shared last night or make an investment or a trade. So that’s the future.”
Meanwhile, PYMNTS CEO Karen Webster wrote last month about the way AI-powered smart agents presented a challenge to super apps like Uber’s blend of food, groceries, mobility, payments and ride-hailing, as well offerings from banks and retailers.
“Across all of these models, the promise to the consumer was convenience. The benefit to the Super App operator was control,” Webster wrote. “Smart Agents break that compact.”
Agents can function across many merchants and platforms at the same time, with the organizing principle shifting from the platform’s ecosystem to the consumer’s intent. In a world governed by Super Apps, discovery is driven by the platform’s priorities, pricing transparency is limited, and the cost of switching is steep.
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“In an agentic world, the agent’s job is to search broadly, compare honestly, and execute efficiently on the user’s behalf,” Webster wrote. “And it’s all guided by preferences and constraints set by the consumer, not by a single platform’s business model. That makes the Super Agent the new front door.”
As a first-year computer science student in Hanoi, Hoang Le started trading cryptocurrency from his university dorm room, egged on by his gamer friends who were making a killing.
At one point his digital holdings jumped to US$200,000 – around 50 times the average annual income in Vietnam.
But they crashed to zero when the bottom fell out of bitcoin and other cryptocurrencies in recent months.
Getting wiped out “hurt a lot”, he said, but he also learned a valuable lesson: he has come to think of the losses as “tuition fees”.
“When profits were high, everyone became greedy,” said Le, now 23, adding that “it was too good to be true”.
Unlike neighbouring China, which has banned cryptocurrencies outright, communist Vietnam has allowed blockchain technology to develop in a legal grey area – barring its use for payments but letting people speculate unimpeded.
