Tim Draper, Founder of Draper Associates, on stage at the Web Summit 2022 technology conference.
Ben McShane | Sports file via Getty Images
Venture capitalist Tim Draper thinks bitcoins will hit $250,000 a coin by mid-2023, even after a killer year for the cryptocurrency marked by industry failures and falling prices.
Draper had previously predicted that bitcoin would surpass $250,000 by the end of 2022, but in early November, at the Web Summit tech conference in Lisbon, he said it would take until June 2023 for that to happen. concretized.
He reaffirmed that position on Saturday when asked what he thought of his price call following the collapse of FTX.
“I extended my prediction by six months. $250,000 is still my number,” Draper told CNBC via email.
Bitcoin would need to gain nearly 1,400% from its current price of around $17,000 for Draper’s prediction to come true. The cryptocurrency has plunged more than 60% since the start of the year.
Digital currencies are in the doldrums as the Fed’s monetary policy tightening and a chain reaction of bankruptcies at major companies in the sector, including Terra, Celsius and FTX, have put intense pressure on prices.
FTX’s demise also worsened an already severe liquidity crisis in the industry. Crypto exchange Gemini and lender Genesis are among the companies that would be hit by the fallout from FTX’s insolvency.
Last week, veteran investor Mark Mobius told CNBC that bitcoin could drop to $10,000 next year, a drop of more than 40% from current prices. The co-founder of Mobius Capital Partners correctly characterized the drop as $20,000 this year.
Nonetheless, Draper is confident that bitcoin, the world’s largest cryptocurrency, is set to rise in the new year.
“I expect a flight into quality, decentralized crypto like bitcoin, and some of the weaker coins becoming relics,” he told CNBC.
Draper, the founder of Draper Associates, is one of Silicon Valley’s best-known investors. He has made successful bets on tech companies including You’re hereSkype and Baidu.
In 2014, Draper bought 29,656 bitcoins confiscated by US Marshals on the dark web market Silk Road for $18.7 million. That year, he predicted that the price of bitcoin would rise to $10,000 in three years. Bitcoin then surged to nearly $20,000 in 2017.
However, some of Draper’s other bets have deteriorated. He invested in Theranos, a healthcare startup that falsely claimed it was able to detect disease with a few drops of blood. Elizabeth Holmes, the founder of Theranos, was sentenced to 11 years in prison for fraud.
“The dam is about to break”
Draper’s rationale for bitcoin’s breakout next year is that there is still 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 owned by women, the dam is about to burst,” Draper said.
Crypto has long had a gender disparity problem. According to a survey conducted for CNBC and Acorns by Momentive, twice as many men as women invest in digital assets (16% of men versus 7% of women).
“Retailers will save approximately 2% on every purchase made in bitcoin versus dollars,” Draper added. “Once retailers realize that 2% can double their profits, bitcoin will be ubiquitous.”
Payment intermediaries such as Visa and MasterCard currently charge a fee of up to 2% each time credit cardholders use their card to pay for something. Bitcoin offers a way for people to bypass intermediaries.
However, using the digital coin for day-to-day spending is difficult as its price is highly volatile and the coin is not widely accepted as currency.
“When people can buy their food, clothes, and housing with bitcoin, they won’t need centralized bank fiat dollars anymore,” Draper said.
“Fiat management is centralized and erratic. When a politician decides to spend $10 trillion, your dollars are worth about 82 cents. Then the Fed has to raise rates to compensate for the spending, and these arbitrary centralized decisions create a inconsistent economy,” he added. Fiat currencies derive their value from their issuing government, unlike cryptocurrencies.
Meanwhile, the upcoming so-called bitcoin halving — which reduces bitcoin rewards for bitcoin miners — in 2024 will also boost the cryptocurrency, according to Draper, as it chokes off supply over time. The total number of bitcoins that will be mined is capped at 21 million.
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