The MicroStrategy executive chairman recently made headlines with his bold claim that Bitcoin BTC 2.81% (BTC) could experience a tenfold increase in value. His confidence in the cryptocurrency is not unfounded, as he cites a confluence of factors that could catalyze such growth.
Firstly, Saylor points to the upcoming Bitcoin halving event slated for April 2024. This event is significant as it will slash the reward for mining new blocks in half, effectively reducing the rate at which new bitcoins are created and thus the amount available for miners to sell.
Currently, miners are estimated to sell around $1 billion worth of Bitcoin each month to cover operational costs. Post-halving, this figure is expected to drop to $500 million monthly, translating to a yearly reduction from $12 billion to $6 billion in natural selling pressure.
Another factor Saylor highlights is the impending implementation of new accounting rules that will allow companies to report the fair value of their Bitcoin holdings. This change is anticipated to encourage more corporations to hold Bitcoin on their balance sheets, potentially leading to increased corporate demand and investment in the cryptocurrency.
Saylor also comments on the broader crypto industry, suggesting that a shift towards more regulated and reliable custodianship is necessary. He criticizes the proliferation of unregistered crypto tokens and the early “crypto cowboys” whose actions have been liabilities for Bitcoin’s reputation and value. By moving towards what he calls adult supervision,the industry can focus on Bitcoin and away from the less reliable aspects of the crypto world.
These factors, combined with the potential for increased buying pressure from products like spot Bitcoin ETFs, paint a picture of a supply squeeze accompanied by a surge in demand a classic recipe for a price increase.
Saylor’s vision is for Bitcoin to not only rise in value but also to mature as an asset class as more responsible financial practices are adopted within the industry.
