Bitcoin (BTC) has been on a wild ride

Since President Donald Trump's presidential election win in November, Bitcoin has been on a wild ride

"Sell a kidney if you must, but keep the Bitcoin."

That was the advice of Michael Saylor, co-founder and executive chairman of Strategy(NASDAQ:MSTR), to investors in late February as the cryptocurrency markets sold off and the company continued to buy more of the digital asset. The company has been making a huge bet on Bitcoin(CRYPTO:BTC), the world’s most valuable cryptocurrency, since 2020, and it's paid off massively for the firm's stock.

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The company, which used to be mainly focused on data intelligence, began buying Bitcoin after its stock price crashed during the early stages of the pandemic. It has since purchased a total of 200,000 bitcoins, making it one of the largest holders of the token. It has also been able to tap the capital markets to access funding that it can use to purchase the crypto, essentially making it a levered play on the coin.

The move has helped to increase the company’s stock price, which has risen by over 1,800% over the past five years, compared to a gain of 340% for Bitcoin over the same period. It has also enabled the company to pay down debt and become profitable.

A triple threat

Saylor, who is a well-known bitcoin bull, also recommends that investors buy the top cryptocurrency, which he thinks can soar 15,810% over time.

"My long-term forecast is 21 years, 29% ARR (annual rate of return). Right now we're 60% ARR, it will decelerate toward 20% ARR over the next 21 years, and the volatility will decelerate," Saylor stated.

The billionaire pointed out that bitcoin makes up a very small fraction of global wealth—0.1% when it trades at $65,000. However, he sees this share increasing. At $13 million, bitcoin would make up 7% of global wealth, which Saylor views as a plausible scenario over the long term.

"If bitcoin rises to $13 million, it will generate a 15,810% return from current levels, and we'll finally have a monetary system that's sound and rational. But if it drops to zero, you'll lose your entire investment—which is why it's best to allocate no more than 5% to 10% of your portfolio to bitcoin."

Another reason to invest in bitcoin

The Trump administration is a huge catalyst for the sector. So far, the administration has taken a much more pro-crypto approach than former President Biden's administration. Trump has placed pro-crypto officials in his cabinet and has pro-crypto advisors. We've already seen the SEC put its lawsuit against crypto exchange Binance on hold and move to drop a lawsuit against Coinbase.

Trump also issued an executive order to create a U.S. Strategic Bitcoin Reserve and a Digital Asset Stockpile. Although most of the tokens that will go into these stockpiles will come from cryptocurrencies seized by the Treasury Department, the bitcoin reserve will be able to buy additional coins, as long as the purchases are at no cost to the American taxpayers and are budget-neutral.

The administration is also planning to create a new regulatory framework for cryptocurrencies, which could help to increase institutional investment in the sector.

"We'll work with Congress to modify the existing regulatory framework to provide clarity and certainty for digital assets, ensuring they are integrated into our financial system in a safe, sound, and useful manner," Trump stated in the executive order.

The administration's actions could have a significant impact on the cryptocurrency market, which has been struggling in recent months amid weak economic data and an intense market sell-off during the past month that has spilled into the cryptocurrency sector, sending prices way down from recent highs.

Crypto has really only been around for a little more than 15 years, so the investment community still has a lot to learn about digital assets. But the sector has often traded in a fashion similar to high-flying tech stocks, so it can't be a complete surprise to see it sell off with the broader market.

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