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It takes a salesman par excellence to weave together into a seamless presentation of three individual topics. Michael Saylor did that by acting as an evangelist for Bitcoin, performing a brilliant sales pitch for MicroStrategy (a company that he has co-founded and is serving as executive chairman) and providing a list of expectations that the crypto industry has from the incoming US administration.
These are my three takeaways on Bitcoin and its future outlook after watching Michael’s presentation at Cantor Crypto, Digital Assets & AI Infrastructure Conference in November 2024:
Lesson #1: What is the global wealth
The total cumulative wealth in the world is estimated at USD 900 trillion. Of this, USD 450 trillion has been invested in a store of value as long-term capital and the other 50% are being held to provide utility.
The largest asset group is real estate (USD 330 trillion), followed by bonds (USD 300 trillion), equities (USD 115 trillion) and money (USD 120 trillion). Bitcoin, which totals about USD 1.8 trillion, is almost 10 times smaller than gold (USD 16 trillion), with art (USD 18 trillion) and cars and collectables (USD 6 billion) making up the rest.
Any physical or financial assets have a limited useful lifetime (10 to 30 years) and are exposed to entropy (regulation, taxation, competition, obsolescence, incompetence and catastrophe), the cost of which is about 3% per year.
The use case for Bitcoin, which, according to Michael, is a thousand-year asset, is to enable the investors to keep the USD 450 trillion safely and to preserve those USD 10 billion a year.
Lesson #2: The Holy Grail of investing
The essence of Satoshi Nakamoto’s discovery was finding a method how to transfer value without a trusted intermediary. It has turned out that sending value is not that important but storing value without a trusted intermediary is.
Bitcoin is not a currency. It allows to perform the transformation of capital into digital capital. Bitcoin is an asset without the financial risks of a currency, stocks and bonds, or the physical risks of real estate or property.
Bitcoin is the 7th largest asset by market cap already today – after gold, NVIDIA, Apple, Microsoft, Amazon and Alphabet.
Bitcoin has been the strongest-performing asset in 11 out of the last 14 years. On an annualised basis over the last 4 years, it has returned 60%, compared to 29% by Magnificent 7 stocks (Apple, Microsoft, Alphabet, Amazon, NVIDIA, Meta and Tesla), 15% by S&P500, 10% by real estate, 6% by gold and the minus 5% by bonds.
For anyone searching for an asset that has the lowest correlation with the S&P500 on a risk-adjusted basis, using Michael’s own words, Bitcoin is the answer. It is the Holy Grail of investing.
Lesson #3: Outlook-2045
When modelling developments over the next 21 years Michael expects that tech will continue to advance, Bitcoin will grow rapidly and gold will gradually get demonetised.
The base case scenario suggests that by 2045 the total value of global assets will amount to USD 4,000 trillion:
- real estate (USD 1,360 trillion);
- equities (USD 850 trillion);
- bonds (USD 840 trillion);
- money (USD 500 trillion);
- Bitcoin (USD 280 trillion);
- art (USD 110 trillion); and
- gold (USD 45 billion).
Bitcoin is expected to grow at an annual rate of return of 29%. Its growth in the first years could be even higher reaching 50% – 60% per year, then slowing down to approximately double the rate of the S&P500 index.
And, as a final note, it has come to a point in the US that creating a traditional capital markets security might take 4 years and cost up to USD 4 million. In comparison, creating a digital token takes about 4 hours and costs USD 40. It is a powerful signal that changes are inevitable.
For those willing to try and pick top lessons of their own here is a link to the video. You may also want to have a look at the forthcoming book by Anthony Scaramucci “The Little Book of Bitcoin: What You Need to Know that Wall Street Has Already Figured Out” with Michael’s foreword (I may be receiving a commission if you decide to purchase it).
* from anything that you are reading, watching or hearing you can realistically expect to remember only a limited number of things. My solution is to pick just 3 items or ideas from any material. This number is non-negotiable. Even the most extraordinary experience gets compressed into 3 things to remember. This approach has worked well for me.
This note was first published on Medium on 23 November 2024.
Aivars Jurcans has more than 20 years of corporate finance and investment banking experience. His services are currently available through Murinus Advisers. More of Aivars’ writings can be found on his page Corporate Financier’s Notes.
