Crypto has been on a wild ride since President Donald Trump's presidential election win in November. Prices surged as investors got excited about the Trump administration's friendly approach toward digital currency. However, weak economic data and an intense market sell-off during the past month has spilled into the cryptocurrency sector, sending prices way down from recent highs.
Crypto has really only been around for a little more than 15 years, so the investment community still has a lot to learn about digital assets. But the sector has often traded in a fashion similar to high-flying tech stocks, so it can't be a complete surprise to see it sell off with the broader market.
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Still, the perennial bull Michael Saylor, who co-founded Strategy (NASDAQ: MSTR), formerly MicroStrategy, in 1989, and is still its executive chairman, recommends investors buy one top cryptocurrency that he thinks can soar 15,810% over time.
If you know who Saylor is and have been following him during the past five years, then you know that the token he is referring to is Bitcoin (CRYPTO: BTC), the world's most valuable cryptocurrency. In 2020, when Strategy, which used to primarily be a data intelligence company, was struggling, Saylor chose to take most of the company's remaining cash and start purchasing hoards of the crypto. It hasn't stopped since and has seen its stock surge, along with Bitcoin's price.
Bitcoin Price data by YCharts.
Interestingly, Strategy's stock has significantly outperformed Bitcoin. The big reason is that the company has been able to tap the capital markets to access funding that it can use to purchase the crypto, essentially making it a levered play on the coin. Strategy now owns about 2% of all bitcoins outstanding.
Last year, Saylor made a bold call, suggesting that Bitcoin could reach $13 million by 2045, which implies 15,810% upside from current prices (as of March 18). He said: "My long-term forecast is 21 years, 29% ARR (annual rate of return). Right now we're 60% ARR, it will decelerate toward 20% ARR over the next 21 years, and the volatility will decelerate."
Another reason Saylor thinks that Bitcoin can explode is that it makes up such a small fraction of global wealth (0.1% when it traded at $65,000). However, he sees this share increasing. At $13 million, Bitcoin would make up 7% of global wealth, which he views as a plausible scenario.
Like many other Bitcoin bulls, Saylor also believes the Trump administration is a huge catalyst for the sector. So far, the administration has taken a much more pro-crypto approach than former President Joe Biden's administration. Trump has placed pro-crypto officials in his cabinet and has pro-crypto advisors. We've already seen the Securities and Exchange Commission put its lawsuit against crypto exchange Binance on hold and move to drop a lawsuit against Coinbase.
Trump also issued an executive order to create a U.S. Strategic Bitcoin Reserve and a Digital Asset Stockpile. Although most of the tokens that will go into these stockpiles will come from cryptocurrencies seized by the Treasury Department, the Bitcoin reserve will be able to buy additional coins, as long as the purchases are at no cost to the American taxpayers and are budget-neutral.
While Bitcoin has fallen from a peak of more than $109,000 this year into the low $80,000s as of this writing, Saylor has held firm. In late February, he wrote on X, "Sell a kidney if you must, but keep the Bitcoin." Strategy has also continued to buy more Bitcoin and is looking to raise more capital to buy still more.
Will it hit $13 million? It's impossible to know. Although Saylor has been right during the past five years and continued to buy Bitcoin as its price has soared, his thesis looks like napkin math at best. That's not to say that it won't continue to climb. I am bullish long term on the digital coin because of its potential to hedge inflation with its finite supply of 21 million tokens.
However, as I mentioned above, it's not only a fairly new asset but also extremely volatile, so while I think it's a good asset to have exposure to, I see no reason to be as aggressive as Saylor and Strategy.
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Bram Berkowitz has positions in Bitcoin. The Motley Fool has positions in and recommends Bitcoin and Coinbase Global. The Motley Fool has a disclosure policy.