Bitcoin, the father of all cryptocurrencies, has pulled back from the brink of the abyss.
Well, sort of…
After almost breaking the $20,000 barrier in mid-December 2017, the world’s leading cryptocurrency has been in a free fall ever since.
But over the last few weeks, Bitcoin has been inching back to $10,000, cracking the $9,000 mark again last Tuesday.
So, what’s happening with this crazy coin now?
The quick answer: There’s buzz from big investors who are singing its praises…
Draper’s Declaration
Billionaire venture capitalist Tim Draper — who scored huge gains from his early investments in Tesla, Skype, Hotmail, Twitter, and even SpaceX — says that Bitcoin will dwarf them all in the near future.
On Saturday, April 21st, Draper participated in an Intelligence Squared debate, presented by Manhattan Institute’s Adam Smith Society. And when asked how Bitcoin compared to his other early investments, Draper said it’ll be “bigger than all of those combined.”
“This is bigger than the internet. It’s bigger than the Iron Age, the Renaissance. It’s bigger than the Industrial Revolution,” said Draper. “This affects the entire world and it’s going to be affected in a faster and more prevalent way than you ever imagined.”
He declared an extremely bullish call for the digital coin, stating it would hit $250,000 within four years. It’s also worth noting that Draper has a solid record of accurately forecasting Bitcoin prices.
In 2015, he predicted that Bitcoin would top $10,000 per coin by the end of 2017. At that time, it was only hovering around the $300 mark.
“In five years you are going to try to go buy coffee with fiat currency and they are going to laugh at you because you’re not using crypto,” Draper said, adding that he believes “there will be a point at which you will no longer really want any of the fiat currency.”
In 2014, Draper purchased almost 30,000 bitcoins in a Marshals Service auction. And in December 2017, he told CNBC that he was still holding all those coins. And if that’s still the case, then he’s sitting on approximately $270 million worth of them at today’s prices.
The opposition in Saturday’s debate was Financial Times Managing Editor Gillian Tett. In her arguments, she highlighted the nefarious uses of Bitcoin, its extreme volatility, and the risks that it poses to investors.
Draper responded by coolly stating that he’s “more secure in my bitcoin than I am in the money that’s sitting there in Wells Fargo.”
Overstock.com CEO Patrick Byrne debated alongside Draper in favor of Bitcoin and was equally bullish on its security.
“This has been hacked at more than anything in history and has never been defeated,” Byrne said. “Last I checked, banks get hacked too. And yeah, Bitcoin is used by unsavory characters. Last I checked, they used U.S. dollars too.”
Draper also spoke on Bitcoin’s market dominance at the debate. He claimed that it’s the likely candidate to win the “long-term crypto battle” against all other altcoins.
He also sat down with Cointelegraph for an interview and claimed that “Bitcoin is clearly the leader” among all cryptocurrencies…
Pfeffer’s Philosophy
The annual Sohn Investment Conference in New York is where Wall Street’s best and biggest gather to present their top stock picks.
And last Monday, for the first time in the event’s 23-year history, one of those investors used the 2018 conference stage to recommend a certain controversial digital investment: Bitcoin.
John Pfeffer, a partner at his London-based family office, Pfeffer Capital, is not only betting on Bitcoin but is also giving it a bold price target of a whopping $700,000. That’s about 75 times its current price.
Although Pfeffer didn’t place a specific timeline on his bullish prediction, his target exceeds even the most optimistic forecasts from other influential investors, such as Draper’s.
“Bitcoin is the first viable candidate to replace gold the world has ever seen,” Pfeffer told the crowd at the conference. “So if bitcoin becomes the dominant non-sovereign store of value, it could be the new gold, or new reserve currency.”
Pfeffer argues that when Bitcoin acts as a store of value, it’s vastly easier to store and securer than its metallic counterpart.
The current value of all privately held gold bullion is about $1.6 trillion, according to Pfeffer.
Assuming that there will be 18 billion bitcoins in circulation by the time the cryptocurrency replaces gold bullion (about 17 million bitcoins have been produced so far, of the total 21 million that can exist), the implied value of Bitcoin would then be $90,000.
This is Pfeffer’s most conservative scenario, which he gives an 8% odds of coming to fruition.
But he has even higher hopes for the digital currency: That it could eventually be to central banks what traditional foreign reserve currencies are today. From euros to yen, governments hold foreign cash to pay international debts and to complete other cross-border transactions.
Total foreign reserves stand at $12.7 trillion.
And although it’s unlikely that Bitcoin will fully replace all foreign reserve currency, Pfeffer also modeled scenarios for the conference attendees in which Bitcoin would account for a mere quarter of foreign reserves. This would imply a 20-times return from current prices.
And if the total value of Bitcoin does rise to the equivalent of all foreign reserves — $12.7 trillion, which includes both gold bullion and reserves combined — then that would result in a $700,000 price for the cryptocurrency.
“As an investor, what interests us most at this point is that Bitcoin might become the dominant non-sovereign currency,” said Pfeffer.
Pfeffer puts only 1% odds on the cryptocurrency actually reaching the lofty $700,000 price prediction. But the possibility alone is enough for him “to make a small, venture capital-style, buy-and-hold longterm bet on”…
The Bottom Line
Draper and Pfeffer aren’t the only investors who have their sights set on the world’s most popular cryptocurrency.
Recently, financial moguls like George Soros, the Rothschild family, the Rockefellers, and many others have also stepped toward Bitcoin trading.
The full impact of the involvement of such big-name investors has yet to be determined. But the news has definitely triggered a solid jump in crypto prices across the board.
Bitcoin’s recent resurgence has also boosted other major cryptocurrencies, including Ethereum, Ripple, and Litecoin.
The most significant gains experienced were with its spin-off Bitcoin Cash, which almost doubled in value from $750 to $1,500.
Bitcoin is sitting well above the $9,000 price point again. And it looks like it will move even higher if recent trends continue.
That’s all for now.
Until next time,
John Peterson
Pro Trader Today