Tim Draper, a widely known Bitcoin advocate, recently went on CNBC to tell of how he thinks the price of Bitcoin is going to hit $250,000 next year. Draper, who had previously predicted the price of $250,000 to be reached by the end of this year, simply added another six months to his earlier prediction after it seemed impossible to come true this year. Despite an inaccurate prediction, the markets are still not writing him off, as the man has got a very good track record of making notable gains from his investments in tech names like Hotmail, Skype, SpaceX, AngelList, SolarCity, Twitter, DocuSign, Coinbase, Robinhood, and Ancestry.com, making him a very well regarded expert in the technology investment field. Furthermore, Draper’s prediction is only extended by six months for the first time ever.
Draper’s Good Track Record in Predicting Bitcoin Prices
Draper was an early supporter of Bitcoin and has made several accurate predictions over the past eight years which have turned out to be correct. For instance, in 2014, Draper predicted that Bitcoin would reach $10,000 within three years and by November 2017, it reached the $10,000 mark. In 2018, when Bitcoin hung around $8,000, Draper predicted it would reach $250,000 by the end of 2022 or early 2023. While 2022 would seem like a failure, his timeline of early 2023 has not yet come to pass, however, the man has added another six months to the horizon due to the overhang of the FTX saga. Who can fault him as, how was he supposed to have been able to predict the failure of FTX in 2018 when the firm had not even been created yet? For readers who are interested to know, FTX was founded in May 2019. Thus, Draper’s extension for his timeline for the $250,00 to be hit seems rather reasonable. He now expects the target price of $250,000 to be hit by the end of 2023 instead of 1Q2023 in his original 2018 forecast.
What Draper Thinks Could Send Bitcoin to $250,000
In short, the basis for his target price of $250,000 is based on the growing adoption of Bitcoin for everyday use, the upcoming halving, as well as technological advancement, even though the man did not elaborate how he arrived at that particular number.
To quote Draper as saying, “Once people can buy their food, clothing, and housing with Bitcoin, there will be no reason to hold fiat. Once the governments realize that they can tax Bitcoin for walled garden businesses, and they will never have another tax cheat, all accounts will be automatic on the blockchain. They will be able to abandon their failing and political currencies."
Draper has another more interesting reason that he feels could drive Bitcoin adoption once people are able to make the purchase of goods and services using Bitcoin, which is gaining traction in several countries - that is the female demographic. According to Draper, women are currently an untapped demographic for crypto, but the rate at which they are accepting the leading crypto is slowly increasing, and could help drive the price of Bitcoin higher when they get more involved.
“This is kind of an interesting statistic. Women control 80% of retail spending. And, until recently, about one in 16 Bitcoin wallets was owned by a woman. Now it’s more like one in eight.”
Draper is also of the opinion that retailers are likely going to start seizing upon the benefits of having to pay lesser fees by accepting crypto payments instead of using traditional banking payment systems which take a heftier cut of each transaction.
“Retailers will save roughly 2% on every purchase made in Bitcoin versus dollars. Once retailers realize that 2% can double their profits, Bitcoin will be ubiquitous. At retail, when the retailer can easily accept Bitcoin, which they kind of can now with OpenNode, they’re going to realize that they can bring another 2% right to their bottom line. And they’re going to encourage their customers to buy with Bitcoin.”
Indeed, the day when retailers switch to preferring the use of Bitcoin for payments, the adoption of Bitcoin will explode since that would force people to want to own Bitcoin. This would drive the use of Bitcoin as payment for everything, including life’s basic needs such as food, clothing and shelter.
FTX Implosion a Boon For Bitcoin
Draper also thinks that the implosion of FTX could end up becoming a positive catalyst for a decentralized payment network like Bitcoin.
“FTX helps people understand why we want to operate with a decentralized currency and why centralized systems eventually break down. I think with the FTX fiasco and the whipsaw effects on our economy from governments printing money and then having to raise rates to cover, people are finally realizing that centralized financial systems like FTX and national central banks don't work as well as decentralized systems.”
Another factor that Draper thinks could boost the price of Bitcoin is the next halving event scheduled for May 2024. Halving events reduce rewards for Bitcoin miners, limiting supply. Based on previous cycles, the price of Bitcoin usually starts to move higher around six months before each halving event, which would translate to about the end of 2023.
Draper Also Thinks Bitcoin Could Make El Salvador Rich
Draper also predicted that the decision by El Salvador President Nayib Bukele to invest in Bitcoin, Bitcoin mining, and make Bitcoin legal tender in the country would transform it from one of the poorest countries in the world currently to one of the richest in time to come.
“There’s only one or two countries in the world who have started to do that. They are going to go from the poorest to probably some of the wealthiest countries in the world over the next 40 years because they’ve done it - El Salvador and the Central African Republic. And then Malta, of course, is going to benefit greatly. Switzerland is benefiting big because they’re making Bitcoin a part of their economy.”
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