Tim Draper: Bitcoin ahead of schedule to hit $250,000, may be as early as 2022
Crypto market consolidation and rapid infrastructure development may be putting Bitcoin ahead of schedule.
Venture capital investor Tim Draper is known for early, prescient buys in the tech space, including Hotmail, Skype, Tesla, SpaceX, Coinbase, Robinhood, Docusign, Twitch and many more.
Among those purchases is a lot of Bitcoin, about 40,000 of which was permanently buried in the lava of the Mt Gox eruption. He replaced those with a further 30,000 Bitcoin from a law enforcement auction following the Silk Road incident.
Those Bitcoin are valued at about US$221 million at today's prices, but on 27 June 2014, he picked them up for just $19 million, he explains to Crypto Finder in a far-reaching interview.
That's about $630 per Bitcoin. Prices collapsed shortly afterwards and remained well below Draper's purchase price for a couple of years. But that was just his cue to buy more, to invest in Bitcoin-related startups.
"I did buy more when Bitcoin went down from the auction price, then I put that to work in a bunch of boost startups that were doing Bitcoin. Some of those have worked out, some haven't," Draper says. "I invested in those companies when Bitcoin was way down, $180 or something, so if they held some of it they did really well."
In addition to prescient investments, Draper is also known for making some uncannily accurate Bitcoin price predictions years in advance.
On 23 September 2014, when Bitcoin was at about $400 and well down from its previous highs, Draper publicly predicted that Bitcoin would reach $10,000 "in three years".
On 29 November 2017, Bitcoin crossed $10,000 for the first time.
Now, 3 years out, he's predicting $250,000 Bitcoin by late 2022 or early 2023.
He's also guessing Bitcoin will finish the year at $8,500, but "my short term guesses are just guesses," he cautions. The "long term predictions have been right on" though.
"I predicted $10,000 three years from when it hit $10,000 – and was even being interviewed at the time I did it – and we hit it on the number. And this $250,000... I am more confident of $250,000 by 2022 or the first quarter of 2023 than I am of the prediction of $8,500 on December 31."
An informed guess
As things stand, the $250,000 prediction is "right on track" Draper says.
If anything, the development activity around Bitcoin in the last year, and the overall cryptocurrency market consolidation in Bitcoin's favour, puts Bitcoin ahead of schedule he adds.
"I'm actually really excited, because I kind of expected things to drop some while the excitement waned, but then, as engineers and entrepreneurs are building more and more of an infrastructure around Bitcoin it looks as if it's going to happen."
"In fact, what I didn't realise was that so many of the cryptocurrencies would be sort of marginalised, and they would lose their backing or the entrepreneur who is driving them, and that consolidates more of that activity around Bitcoin."
"So I actually think $250,000 may be a little bit light. It actually may be more like the beginning of 2023, but all systems seem to be go."
The impact of the halvening?
Draper's $250,000 Bitcoin prediction wasn't really based on the halvening, he says. It was based on Bitcoin as a currency, rather than the stock to flow valuation model which is more popular when assessing Bitcoin as a hard-value asset.
The kicker is that both of them align at around the same number at the same time.
"My prediction was really based on creating enough of an infrastructure for Bitcoin to get a 5% market share around the world, as a currency," Draper explains. "If you do the math on the halvening, you end up somewhere around my $250,000 prediction around the same time... so it's really interesting how those two things have come together."
Bitcoin as an alternative currency
In the context of cryptocurrencies being an "alternative currency" type of product in the future, Bitcoin also retains its position, Draper says.
"If you're a retailer, the first crypto you'll ever take will be Bitcoin," he pointed out. "Bitcoin will have the largest market share out there just by nature of its brand."
And the alternative currency market as a whole is going to be big business, Draper predicts.
"The currency business today is $86 trillion. If you add crypto in 10 years from now, I think it's going to be $120 trillion. That's a huge, huge market... This is a huge opportunity. We are going after something that is absolutely enormous, and it's going to change things. People are going to be for it, against it, but technology ultimately wins all wars."
"This is fundamental... there's a currency we can use anywhere, across all geographic borders. It's not tied to what one person or a set of people, or one government or one set of political forces or military forces tell us it's supposed to be worth. Instead, it's worth what the market will bear. That is going to be incredibly valuable. It's going to be the first step towards a truly decentralised world."
The anticipated growth of an alternative currency market is naturally inseperable from macro economic factors, Draper also points out. The creeping malaise that seems to be infusing the modern global economy, and inevitable attempts to counter it such as negative interest rates, may also point at the rise of alternative currencies.
"Negative interest rates don't make any sense," Draper says. "Why wouldn't you just put your money into your mattress? I think, interestingly, Bitcoin still has a very positive interest rate and I'm kind of moving toward that."
As confident as he's feeling, Draper also points out that he's been wrong before.
"The one time I gave financial advice, I gave it to my father in law and the stock immediately went from $12 to $2," he remembers. "Making it up to him was a very long, long process... he was very nice about it, but it was a long process."
Will these predictions pan out? The answer is a definitive maybe.
Watch the full interview to hear more about what the future of alternative currencies may look like, and where Tim Draper sees Bitcoin fitting into it.
Disclosure: The author holds BNB, BTC at the time of writing.