Tim Draper predicts bitcoin will reach $250,000 despite FTX crash

Tim Draper, founder of Draper Associates, on stage at the Web Summit 2022 tech conference.

Ben McShane | Sports file via Getty Images

Venture capitalist Tim Draper thinks bitcoin By mid-2023, a coin will hit $250,000 after a year marked by industry failures and falling prices.

Draper previously predicted that bitcoin would surpass $250,000 by the end of 2022, but told the Web Summit tech conference in Lisbon in early November that it would take until June 2023 for that to happen.

He reiterated his stance on Saturday when asked how he felt about the price call following the collapse of FTX.

“I’ve extended my forecast by six months. $250,000 is still my number,” Draper told CNBC via email.

For Draper’s prediction to come true, bitcoin would need to rise nearly 1,400% from its current price of $17,000. The cryptocurrency has lost more than 60% since the beginning of the year.

Digital currencies are struggling as the Fed’s tighter monetary policy and a chain reaction of bankruptcies at major industrial firms such as Terra, Celsius and FTX put strong pressure on prices.

The collapse of FTX worsened the already severe liquidity crisis in the industry. Cryptocurrency exchange Gemini and lender Genesis are among the firms said to be affected by the FTX bankruptcy.

Last week, veteran investor Mark Mobius told CNBC that bitcoin could fall to $10,000 next year, a more than 40% drop from current prices. The Mobius Capital Partners co-founder called it the right thing to drop to $20,000 this year.

Nevertheless, Draper is confident that bitcoin, the world’s largest cryptocurrency, is set to rise in the new year.

“I expect a flight to a quality and decentralized cryptocurrency like bitcoin, and some weaker coins becoming relics,” he told CNBC.

The founder of Draper Associates, Draper is one of Silicon Valley’s best-known investors. He made successful bets on tech companies including TeslaSkype and Baidu.

In 2014, Draper bought 29,656 bitcoins seized by US marshals from the Silk Road dark web market for $18.7 million. That year, he predicted that the price of bitcoin would reach $10,000 in three years. Bitcoin approached $20,000 in 2017.

However, some of Draper’s other bets have gone awry. He invested in Theranos, a health startup that falsely claimed it could detect diseases with a few drops of blood. Elizabeth Holmes, the founder of Theranos, was sentenced to 11 years in prison for fraud.

“The band is about to fall”

Draper’s reasoning for bitcoin coming out next year is that there is a huge untapped demographic for bitcoin: women.

“My hypothesis is that since women control 80% of retail spending and only 1 in 7 bitcoin wallets are currently held by women, the dam is about to break,” Draper said.

Crypto has long had a gender inequality problem. According to a survey conducted for CNBC and Acorns by Momentive, twice as many men than women invest in digital assets (16% of men vs. 7% of women).

“Retailers will save about 2% on every purchase made with bitcoin against the dollar,” Draper said. “Once retailers realize that 2% can double their profits, bitcoin will be everywhere.”

such as payment intermediaries Visa and MasterCard currently, credit card holders are charged a fee of up to 2% every time they use their card to pay for something. Bitcoin provides a way for people to bypass middlemen.

However, the digital coin is difficult to use for day-to-day spending because its price is highly volatile and the coin is not widely accepted as a currency.

“When people can buy their food, clothing and shelter with bitcoin, they will have no use for centralized bank fiat dollars,” Draper said.

“Fiat governance is centralized and unstable. When a politician decides to spend $10 trillion, your dollar is worth about 82 cents. Then the Fed has to raise rates to cover the spending, and these arbitrary centralized decisions create an inconsistent economy,” he added. Unlike cryptocurrencies, fiat currencies derive their value from the issuing government.

Meanwhile, the next so-called bitcoin halving in 2024, which reduces bitcoin rewards to bitcoin miners, will also boost the cryptocurrency as it chokes supply over time, according to Draper. The total number of bitcoins that will ever be mined is limited to 21 million.

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