Opinion by: Daniele Bernardi, Founder of Diaman
The Bitcoin Paradox: Can it Reach $13 Million in 2045?
Michael Saylor, CEO of MicroStrategy, recently made a bold statement regarding Bitcoin’s potential growth. According to him, Bitcoin (BTC) will grow at an average annual interest rate of 29% over the next 21 years and reach $13 million by 2045. This prediction has sparked intense debate among cryptocurrency enthusiasts and investors.
As someone who has been following this space for a while, I’d like to analyze Saylor’s statement using the "Rate of Adoption" model that I first presented in February 2020 at the Quant Workshop Conference. This model correlates Bitcoin’s price to the growth rate of non-zero wallets, which are wallets containing at least a fraction of Bitcoin.
The Rate of Adoption Model
The Rate of Adoption model is based on the idea that Bitcoin’s price is closely tied to its adoption rate. The model predicts that as more people start using and holding Bitcoin, its price will increase exponentially. I first presented this model in 2020, and it predicted a peak price of $63,000 for 2021, which was slightly below the all-time high of $67,000 reached in October 2021.
In 2023, I updated the model and published the results in Cointelegraph. The prediction for the current cycle was $130,000, a price that Bitcoin is likely to reach soon. With the approval of Bitcoin ETFs in the United States and several other companies promoting such instruments, it’s clear that the parameters have changed.
Recalculating the Model
Given these changes, I recalculated the model using the latest data and variables. The results indicate that the price of Bitcoin could reach $261,000 by 2025, nearly double the previous estimate.
Comparing Saylor’s Projection to Our Model
Saylor’s projection is based on an average annual return over 21 years, whereas our model uses a more sophisticated power law approach. This approach relates the average price per wallet to the number of non-zero wallets in circulation and multiplies these variables to get the expected market capitalization of Bitcoin.
The multiplication of these variables provides the expected market capitalization of Bitcoin, from which it’s easy to derive the price. Of course, all these projections are based on the assumption that Bitcoin will continue to exist and its adoption rate will follow a power curve, as it has thus far.
Bitcoin’s Potential Trajectory
It’s 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. I’m not suggesting holding Bitcoin indefinitely, but it should undoubtedly be held for as many years as possible, or at least until it becomes clear that it will be replaced by something more attractive and functional (which, as of today, does not exist).
2025 Forecast: $261,000
Now, let’s move on to the projected relative peak for 2025 based on the Rate of Adoption model. Considering the increased adoption driven by Bitcoin ETFs, the 2025 forecast is $261,000, nearly double the previous estimate.
Current Dynamics of Bitcoin’s Price
Of course, there are no guarantees that these values will materialize, nor should this be considered investment advice. I always recommend conducting thorough research and analysis before making any investment decisions, ideally with a qualified financial adviser who can guide you on the appropriate allocation within your portfolio.
It’s crucial to understand the dynamics and potential of Bitcoin thoroughly. Otherwise, it may always seem too expensive to buy.
The Upper Boundary for 2025
Looking at the chart above, you’ll notice that even with Bitcoin hitting all-time highs, we are still far from the upper boundary projected to mark the relative peak for 2025.
A Word of Caution
As Saylor himself said, "Everyone gets the Bitcoin price they deserve." This phrase highlights the importance of understanding and accepting the risks associated with investing in cryptocurrencies. With great rewards come great risks, and it’s essential to be prepared for any outcome.
Conclusion
In conclusion, while Saylor’s prediction is bold and intriguing, our model suggests that Bitcoin could reach $261,000 by 2025. It’s essential to remain aware of the potential trajectory of Bitcoin and not settle for gains too early. With thorough research and analysis, anyone can make informed investment decisions and potentially reap the rewards of this exciting space.
About the Author
Daniele Bernardi is the founder of Diaman, a company that specializes in providing insights and analysis on cryptocurrency markets and blockchain technology. He has been following the cryptocurrency space for several years and has developed a deep understanding of its intricacies. His articles are meant to provide thought
