Interviews with Tim Draper and industry leaders concerning Bitcoin’s recent tribulations.
Bitcoin is not the only cryptocurrency -- just the only one your relatives are likely to have heard of. However, the fate of Bitcoin can impact the price of alt coins everywhere and the cryptocurrency industry overall.
In the past week, Bitcoin dipped to around $32,000 -- less than half of it’s April high of $65,000 -- and though it has shown some signs of recovery, public sentiment seems to feel worried. Elizabeth Warren’s comments to the SEC have exacerbated regulatory fears and the discussion about crypto has been active in government with supporters and detractors sending mixed signals as to its regulatory future.
Price movements and sheepish publish sentiment have people worried about the future of this amazing bull run that has been ongoing since late 2020, raising the question of whether “laser eyes” (Bitcoin reaching $100,000) are a realistic consideration in 2021-2022.
Billionaire investor Tim Draper has been a long time advocate for Bitcoin and cryptocurrency overall. Draper’s other famous investments include Baidu, Hotmail, Skype, Tesla, SpaceX, AngelList, SolarCity, Ring, Twitter, DocuSign, Coinbase, Robinhood, Ancestry.com, Twitch, Cruise Automation, and Focus Media -- so he has a proven track record of picking winning investments.
Draper hasn’t been shy in his predictions about Bitcoin. In 2018, when Bitcoin was trading for around $8,000, Draper predicted that Bitcoin would reach $250,000 by end of 2022 or early 2023.
In order to fully appreciate the magnitude of Draper’s prediction, understand it was seen by some as a hyperbolic claim at the time. But 3 years later he stands by his prognostication.
In an exclusive interview with Benzinga, Draper confirmed his prediction.
Are you standing by your predictions? How certain are you feeling given the recent negative movements?
“Yes, I stand by my prediction. $250k per bitcoin by end of 2022 or early 2023. We have had many ups and downs and will continue to, but the global, trusted, decentralized, frictionless, open, transparent bitcoin will become increasingly popular as more and more applications evolve,” Draper said.
What should investors remember here that they will tend to forget in all the furor around the dip?
“Bitcoin represents freedom and trust to me. Many people around the world are already benefiting from the economies that can be built around Bitcoin. These small movements are nothing compared to the constant degrading of the Nigerian or Argentinian currencies. And if the government keeps printing dollars, bitcoin is a modern hedge against inflation,” Draper said.
What lesson do we need to learn from this?
“Technology ultimately prevails through fits and starts,” Draper said.
Though blame has and will be cast, at Musk primarily and now, perhaps, Elizabeth Warren, there has been a confluence of events that led to some negative price movements for Bitcoin.
Blockchain startup Kirobo recently announced they surpassed $1 billion in transactions for their cryptocurrency which adds an “undo” feature for transactions.
On that note, in looking for the flashpoint that led to Bitcoin’s recent ill fortune, we asked experts what recent events they would hit “CTRL+ALT+Z” and undo if they had the power.
Few Regrets in 2021
Adrian Pollard, Co-Founder at bitHolla pointed to the energy consumption concerns of Bitcoin as an obstacle he would undo if possible.
“If we could undo a recent event in BTC it would be Elon Musk's energy comments which were about how energy intensive the industry is which was false information. This setback adoption of bitcoin by larger companies as energy usage today is a sensitive issue. Luckily I think this is a 1 step back, 2 steps forward, kind of thing as it will push for better insight and data into the real energy usage of BTC and will show that mining is in fact highly energy-efficient,” Pollard said.
Ben Weiss, CEO for CoinFlip, pointed to the advancements in Bitcoin adoption outside of the U.S. as a point of inspiration, with no regrets for 2021.
“This past year has been an incredible one for the advancement of crypto as a technology and a currency. From what we’ve seen in El Salvador to institutional investors to adoption in some of America’s largest cities, there has been a massive evolution in how crypto is perceived and used,” Weiss said.
Weiss also pointed out that what seems like bad news at the time has a way of working out for the betterment of the industry.
“For example, many people were upset over increased Chinese regulation of bitcoin mining, but this will actually help bitcoin in the long run as China had the most miners by far before regulations. Now, these miners will be forced to operate elsewhere, distributing mining amongst more countries. In addition, the energy Chinese miners use almost twice the amount of fossil fuels that North American miners use. China’s strict regulations will also make bitcoin mining cleaner,” Weiss said.
Marie Tatibouet, CMO at Gate.io concurred -- no regrets even for events that arguably negatively impacted Bitcoin prices.
“The two biggest events that happened were – Tesla refusing BTC payments and China banning mining. I believe both of them will have a long-term positive effect on the Bitcoin ecosystem. The Tesla ban has forced us to think about the long-term sustainability of mining, while the China ban will help in decentralizing hashrate distribution,” Tatibouet said.
The Fallout of Bitcoin’s Summer Slump
Bitcoin’s summer slump threatens to take some of the momentum away from other blockchain projects and alt coins by reducing buyer interest and trading volume. It’s impact has already been many projects including Ethereum, Cardano, and Dogecoin.
However, Weiss from Coinflip sees this as a time of opportunity for alt coins.
“Volatility always breeds opportunity, as many individuals can profit from buying and selling at the right time. All altcoins generally follow bitcoin, for the most part, but we have seen a bit of divergence in Ethereum relative to BTC. Altcoins have begun to gain in price relative to bitcoin,” Weiss said. “I don’t think instability is a bad thing. When we see the price dip, an opportunity is created for new investors who may not have wanted to get in at higher prices,” Weiss said.
Tatibouet of Gate.io sees the correlation but sees a future moving toward decoupling BTC and alt coins. As much as the shining star of the crypto world has brought global attention to blockchain and crypto projects, other projects will not thrive if kept solidly in Bitcoin’s shadow.
“Bitcoin has always been more volatile compared to other crypto assets. Being the market leader, BTC often dictates how the rest of the market performs. However, we have definitely seen over the last 3 months that when BTC doesn’t move much, the traders get bored and move to altcoins, leading to “alt season.” As the market keeps maturing, there should be a reasonable amount of decoupling from Bitcoin and the rest of the crypto market. Hence, I don’t really think BTC’s “unstability” will be detrimental in the long term,” Tatibouet said.
Of course, Scott Melker, “The Wolf of All Streets,” crypto trader and writer/podcaster, challenges the premise completely that there is any instability to really worry about.
"Bitcoin price has been stable for over 8 weeks, trading in a range between 41K and 30K on decreasing volume with minimal volatility. The notion that it is unstable is a result of over analysis paralysis and not of reality. Until price breaks above or below this range, there's very little to discuss in terms of price action. The old Wall Street adage Sell in May and Go Away seems to be appropriate, as traders are clearly watching the market from the sidelines... Oftentimes, it is best to sit on your hands and wait then to obsessively watch a market that is doing nothing.
It may be too optimistic to use this cross-section of investors and project leaders in blockchain as a positive indicator for BTC, but it does show that the industry is in lock step. That seems like potentially good news for the investor. Bitcoin is staked in the belief of the participants.
The outpouring of interest in Bitcoin from mainstream finance and the public at large, as well as the surprising notoriety of NFTs this year, have been major boosts for the blockchain world as a whole, bringing mainstream interest as an unsteady tide that helped raise at least many ships.
But Bitcoin is just 13 years old after all -- and all the enthusiasm and demand for a globally distributed cryptocurrency bring equally enthusiastic scrutiny, and as Scott Melker said, reactions can become perhaps unduly magnified.
At any rate, it wouldn’t be as dramatic a climb to $100,000 if there weren’t a few setbacks in the journey.
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