The Bitcoin and cryptocurrency space has long been rife with either illogical or unfulfilled predictions.
One “analyst” came up with the theory that XRP would hit $589 apiece, meaning that the cryptocurrency would have a higher market capitalization than all fiat money (M0) on Earth; others have floated the idea that Bitcoin will reach one million a pop by the end of 2020, which is something unlikely to happen unless the whole fiat world collapses.
But, there are some analysts sticking to their guns. Prominent venture capitalist Tim Draper, for instance, recently doubled down on his call that Bitcoin will hit $250,000 — over 20 times higher than the current price — by 2022. Crazy, right?
Bitcoin Rally Not Done Yet
In an interview with crypto television outlet BlockTV last week, Tim Draper, a prominent Silicon Valley investor that famously bought thousands of BTC in a Silk Road auction, continued to tout his $250,000 prediction.
The Draper Fisher Jurvetson co-founder stated that he believes it is within Bitcoin’s potential to absorb 5% market share of fiat currencies, which would translate to around $250,000 a coin or a $5 trillion market capitalization. His deadline for this prediction, as aforementioned, is by the end of 2022.
It is important to note that Draper is expecting for cryptocurrencies to overtake all fiat currencies with due time, but has yet to pin an exact date to this forecast.
Bitcoin to hit $250,000 by 2022? @TimDraper thinks that is a conservative prediction.
“$250,000 means that bitcoin would then have about a 5% market share of the currency world and I think that may be understating the power of bitcoin.”
— BLOCKTV (@BLOCKTVnews) September 13, 2019
Draper’s thesis for continued growth in the price of BTC primarily stems from his opinion that (some) fiat currencies are “poor”. He has stated in previous interviews that fiat monies’ centralization, non-transparent (mysterious and variable) inflation schedule, and the fact that they are inherently subject to political whims make them inferior to Bitcoin.
Also, the American investor has argued that as some of the world’s brightest developers, engineers, and academics are getting involved in the industry, there is likely to be a capital flight from fiat to digital assets with time. In the BlockTV, he elaborated on his thesis:
“As it becomes easier for Bitcoin to be used, if people can do whatever they do right now with it, they will start to realize that they like BTC much better than fiat. They will begin to realize that their fiat will depreciate with value because of the natural inflation rate.”
Draper’s latest comments on his lofty prediction came shortly after Bobby Lee, the co-founder of China’s first formal Bitcoin exchange and the brother of Litecoin’s Charlie Lee, also expressed his extreme optimism about the Bitcoin price. Speaking to Yahoo Finance, Lee said that “within a very short amount of time”, Bitcoin is likely to surpass “$20,000, […] $50,000, $100,000, even $200,000”.
Not a Crazy Prediction
While many may see a $250,000 prediction for BTC as the ramblings of a biased bull, there are multiple fundamental factors that will drive Bitcoin demand in the years to come.
Firstly, as reported by Blockonomi previously, rate cuts and quantitative easing by the world’s central banks.
Just last week, the European Central Bank continued to push its policy interest rate further into the negative; the Federal Reserve is also expected to bring its interest rate lower in this month and into 2020, with Donald Trump yelling on Twitter for negative rates.
Dan Tapiero, a prominent fund manager and recent convert to the Bitcoin revolution, recently argued that in the medium term, Trump’s comments are “a direct call for a debasement (inflation) of the U.S. dollar in an attempt to create excess growth into the 2020 elections.” He thus claimed that gold and Bitcoin should benefit from negative interest rates.
Secondly, the macroeconomic backdrop continues to worsen. The China-U.S. trade war is still in full swing, Hong Kong protests continue, there continues to be a large spat over Brexit, a Saudi oil field was just bombed, among other concerns. Everyone from economists to Bloomberg opinion writers believes that with these rising global tensions, money will begin to flood into safe havens like Bitcoin.
And lastly, Bitcoin is about to see its next block reward reduction, which will result in a massive negative supply shock. If history is anything to analyze, this event could see Bitcoin explode yet again, potentially to enter into the six-digit region.
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