As the CEO of MicroStrategy, Michael Saylor has made a bold statement regarding Bitcoin’s potential growth over the next two decades. According to him, Bitcoin (BTC) will experience an average annual interest rate of 29% between now and 2045, resulting in a price of $13 million by that year. This prediction is met with both excitement and skepticism from investors, prompting us to analyze its validity using our "Rate of Adoption" model.
The Rate of Adoption Model
For those familiar with my work, the "Rate of Adoption" model is a tool used to correlate Bitcoin’s price growth with the rate at which new wallets are added to the network. This model was first introduced in February 2020 at the Quant Workshop Conference and has been updated several times since then. In 2023, I published an update on Cointelegraph, predicting a peak price of $130,000 for Bitcoin during the current cycle.
Recalculating the Model
With the approval of Bitcoin ETFs in the United States and increased promotion by major companies, we have decided to recalculate the model. The new data points suggest that our previous prediction was on track, but with a higher expected peak price. By analyzing these parameters, we are now ready to estimate Bitcoin’s price for 2025.
Comparing Predictions
Saylor’s projection of an average annual return over the next 21 years is an interesting point of comparison with our model. While his approach uses a simple interest rate calculation, our "Rate of Adoption" model employs a more sophisticated power law to estimate Bitcoin’s market capitalization and subsequent price.
The Power Law
For those unfamiliar with this concept, the power law describes the trend of Bitcoin’s price growth over time. By using this approach, we can predict that by 2045, Bitcoin’s price could reach $8.3 million on the median curve or exceed $21.6 million on the higher curve driven by semi-exponential surges.
The Importance of Understanding
It is crucial to note that 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. The market is filled with investors who settle for gains of +60% or +100%, only to exit too early and miss out on subsequent price increases.
Holding Bitcoin Long-Term
While Saylor advocates holding Bitcoin indefinitely, I recommend holding it for as many years as possible or until it becomes clear that a more attractive alternative will replace it. As of today, there is no such alternative available.
The 2025 Forecast
Using our recalibrated model, we estimate that the relative peak price for 2025 could reach $261,000, nearly double our previous estimate. However, this value should not be considered a guarantee and investors should conduct thorough research before making any investment decisions.
Conclusion
In conclusion, while Saylor’s projection of an average annual return over the next 21 years is intriguing, our "Rate of Adoption" model provides a more sophisticated approach to estimating Bitcoin’s price growth. By understanding the power law describing its trend and the current dynamics of Bitcoin’s price, investors can make informed decisions about their investments.
Insights
- The "Rate of Adoption" model uses a power law to estimate Bitcoin’s market capitalization and subsequent price.
- Saylor’s projection of an average annual return over the next 21 years is met with skepticism from some investors.
- Our recalculated model estimates that the relative peak price for 2025 could reach $261,000.
- Investors should conduct thorough research before making any investment decisions.
About the Author
Daniele Bernardi is a serial entrepreneur and founder of Diaman, a group active in investment management, software development, and crypto activities. He was recognized as an "Inventor" by the European Patent Office for his European and Russian Patent in the field of mobile payments.
Disclaimer
This article is for general information purposes only and should not be considered as legal or investment advice. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.
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