As the cryptocurrency market continues to evolve, opinions on its future trajectory abound. Recently, Michael Saylor, CEO of MicroStrategy, made a bold statement regarding Bitcoin’s growth prospects. According to him, the digital currency will grow at an average annual rate of 29% over the next 21 years, with a potential price tag of $13 million by 2045. In this article, we’ll delve into Saylor’s prediction and compare it with our own Rate of Adoption model.
The Rate of Adoption Model: A Brief Overview
For those familiar with my previous work, the "Rate of Adoption" model is a crucial tool for predicting Bitcoin’s price trajectory. The model correlates the digital currency’s value to the growth rate of non-zero wallets – wallets containing at least a fraction of Bitcoin. I first presented this model in February 2020 at the Quant Workshop Conference, organized by Diaman Partners Ltd.
The model predicted the 2021 peak at $63,000, slightly below the all-time high of $67,000 in October 2021. In 2023, I updated the model and published the results in Cointelegraph, estimating a price of $130,000 for the current cycle – a mark that Bitcoin is likely to reach soon.
Recalculating the Model: The 2025 Forecast
With the approval of Bitcoin ETFs in the United States and 11 companies simultaneously promoting such an instrument, it’s clear that the parameters have changed. I had planned to recalculate the model in autumn 2024, but here we are. With the recalibrated model, I’m ready to estimate Bitcoin’s price in 2025 – a year that will likely see the next crypto winter.
Comparing Saylor’s Projection with Our Model
Saylor’s prediction of an average annual return over the next 21 years stands in contrast to our more sophisticated power law approach. This method relates the average price per wallet to the number of non-zero wallets in circulation, providing a market capitalization estimate from which the price can be easily derived.
The Power Law: A Fundamental Principle
The chart below illustrates the relationship between Bitcoin’s price and its power law describing the trend over time. Our calculations indicate that by 2045, Bitcoin’s price could reach $8.3 million on the median curve, while exceeding $21.6 million on the higher curve driven by the semi-exponential surge marking the end of each bullish cycle.
The Importance of Long-Term Holding
It is essential to remain aware of Bitcoin’s potential trajectory, as the market is filled with individuals who settled 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).
The 2025 Forecast: A Revised Estimate
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, our revised estimate is $261,000 – nearly double the previous estimate.
Current Dynamics and Market Sentiment
As you can see from the chart above, even with Bitcoin hitting all-time highs, we are still far from the upper boundary projected to mark the relative peak for 2025. I’ll leave you with a particularly insightful phrase: "Everyone gets the Bitcoin price they deserve."
Conclusion and Final Thoughts
In conclusion, while Saylor’s prediction of an average annual return over the next 21 years is certainly bold, our own Rate of Adoption model presents a more nuanced view of Bitcoin’s potential trajectory. By recalculating the model with the increased adoption driven by Bitcoin ETFs, we arrive at a revised estimate of $261,000 for the 2025 peak price.
As always, I 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 is crucial to understand the dynamics and potential of Bitcoin thoroughly. Otherwise, it may always seem too expensive to buy.
About the Author
Daniele Bernardi is a serial entrepreneur and founder of Diaman Partners Ltd. He has been involved in the cryptocurrency space since its inception and has developed several models for predicting price movements. His views and opinions are his alone and do not necessarily reflect or represent those of Cointelegraph.
Disclaimer
The information provided above should not be taken 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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