Top investor makes optimistic Bitcoin price prediction of $700k
A leading investment firm partner has spoken out with an extremely positive Bitcoin price prediction.
Speaking at the annual Sohn Investment Conference in New York, John Pfeffer, of Pfeffer Capital, says Bitcoin will hit $700,000.
Pfeffer made his Bitcoin price prediction at the event where Wall Street’s biggest hedge fund managers and investors confer their top stock picks.
In the conference’s 23-year history, it was the first time that any of the speakers had recommended investing in Bitcoin.
Mr. Pfeffer is not only betting on Bitcoin but says it will be 75 times the current value of roughly $9,500.
While Pfeffer doesn’t give a timeframe on his prediction, his target exceeds some promising forecasts from other prominent investors.
Venture capitalist Tim Draper gave a Bitcoin price prediction earlier this month, saying it would reach $250,000 by 2022.
At the Sohn Investment Conference at New York’s Lincoln Center, Pfeffer said to the crowd of some of Wall Street’s most influencial figures:
“Bitcoin is the first viable candidate to replace gold the world has ever seen.
“So if Bitcoin becomes the dominant non-sovereign store of value, it could be the new gold or new reserve currency.”
How Pfeffer calculates his Bitcoin price prediction
Pfeffer is working under the assumption that Bitcoin will inevitably replace all of the gold bullion currently owned by private investors.
To put it simply: The gold bars that people retain in a safe or bury in their backyard as a way to store their money in something more reliable than paper.
The gold bars, in this case, are also what’s called a “store of value.”
“Bitcoin is vastly easier to store and secure,” Pfeffer explains.
According to Pfeffer, the current value of all private gold bullion is around $1.6 trillion.
So far, around 17 million Bitcoin have been created, out of the maximum 21 million that can ever exist.
Pfeffer’s calculations state that by the time the cryptocurrency fully replaces gold bullion, there will be 18 million Bitcoin in circulation.
By this point, the implied value for Bitcoin would be $90,000.
Pfeffer gives this 8% odds of coming to fruition, which is his most conservative scenario.
But Pfeffer says Bitcoin could ultimately be to central banks what traditional foreign reserve currency is today.
from Japanese yen to euros, governments hold foreign money to pay international debts and transfer funds cross-border.
Pfeffer explains to the conference attendees:
“It’s imaginable that Bitcoin displaces some form of reserves over time.”
The total value of these foreign reserves currently stands at around $12.7 trillion, he added.
Pfeffer also presented scenarios in which Bitcoin would represent a quarter of foreign reserves.
This Bitcoin price prediction would imply a 20x return from current values.
Should Bitcoin rise to the equivalent value of $12.7 trillion of all foreign reserves, it would put Bitcoin at a price of $700,000 each.
“As an investor, what interests us most at this point is that Bitcoin might become the dominant non-sovereign currency,” said Pfeffer.
He adds that the odds of Bitcoin hitting $700,000 is enough for him “to make a small, venture capital-style, buy-and-hold long-term bet on.”
Pfeffer added that his strategy is to “buy the ticket, take the ride,” to put it another way.
In addition to Bitcoin, Pfeffer previously dabbled with investing in other cryptocurrencies over the past two years, but he has since pared his crypto portfolio back to just Bitcoin again.
He says that many other cryptocurrencies, besides Bitcoin, don’t simply function as money, but more as utility tokens.
These coins are meant to perform a specific operation and serve as something other than just pure currency.
Tokens running on the Ethereum network, for example, are used to complete “smart” contracts, for example.
But using the economic theory of money known as the “equation of exchange,” Pfeffer posited that a cryptocurrency network is only as valuable as its total economic activity, divided by the velocity at which the money changes hands.
Because, inherently, utility tokens will be exchanged regularly, their value will continually be under pressure, Pfeffer said:
“I think they’re going to turn out to be value traps.”
On the other hand, Bitcoin offers the opposite proposition, Pfeffer adds:
“There is one way out of this value trap, which is if people wanted to store their wealth in a crypto asset.”
Supporting his original thesis, he says this is where Bitcoin comes in: To replace gold.