Billionaire Tim Draper says bitcoin (BTC) could hit $250,000 next year while renowned investor Mark Mobius counters it could crash to $10,000. Who's right?
That's anyone's guess but for now, the world's largest cryptocurrency and the beleaguered cryptocurrency market it helped usher is expected to remain in the doldrums for much of next year, if not longer.
Speaking at the Web Summit tech conference in Lisbon earlier this month, Draper stuck to his forecast by the middle of 2023, though he originally predicted the currency would hit a quarter-of-a-million dollars by late 2022. The financier noted a flight to quality will occur in coming months, fueling demand for bitcoin and turning other alternative coins into "relics." Women, who have stayed on bitcoin's fringes, will also begin buying, further boosting its price, Draper told CNBC.
In contrast, Mobius, who has made his name as an emerging markets expert, noted bitcoin will plunge to $10,000 after breaking the $17,000 technical level, as higher interest rates will make holding cryptocurrencies, which no longer pays interest after a string of crypto lender bankruptcies, unattractive.
"I am way more in the Mobius camp and think bitcoin can go even lower," said Matthew Tuttle, CEO of Tuttle Capital Management. "Claims that bitcoin is a catalyst or alternative to precious metals or other currencies, that it's uncorrelated with stocks, which is what people were saying when it was 60K, are out the window."
Israeli digital-assets investor Yaniv Feldman agreed bitcoin will stay pressured amid several headwinds, notably FTX's collapse and the Federal Reserve's interest-rate hiking campaign, which have wiped out roughly $1.3 trillion off the digital currency market this year. "I don't see anything happening in 2023 except bitcoin dropping even lower," Feldman predicted.
Two Scenarios
Still, Feldman sees the possibility for the cryptocurrency to rebound strongly in the medium-to-long term, also as he believes peer-to-peer or blockchain-enabled decentralized finance will continue to hold future value.
"It will happen in one or two cases: In the first, the global economy collapses due to instability. The dollar drops, losing its reserve status and people move back to gold or another reserve currency, which could be bitcoin," he said. "The second is the U.S. economy can bounce back and avoid bankruptcy. Growth then returns and we see greater bitcoin demand."
According to Feldman, bitcoin continues to hold promise as a store of value while decentralized, or non-government controlled money will continue to gain traction against the advent of central bank digital currencies (CBDCs).
"Fiat doesn't fulfill the role of a decentralized, autonomous store of value," he said. "Countries can print whatever they want and eventually freeze (CBDC) digital wallets. When that happens, the ability to store value out of the reach of banks or countries will be even greater."
'Very Cautious'
Blockchain consultant Merav Ozair said people have turned "very cautious" about bitcoin until they see further data about how the U.S. recession will play out. FTX apart, other recent bankruptcies such as those involving crypto lenders Celsius, Voyager and Blockfi, which once offered unrealistically high rates for crypto deposits, have also rankled investors. To make matters worse, worries that Binance, the world's largest digital currency exchange, could follow FTX's steps, are also unnerving markets.
"A miracle will need to happen for bitcoin to shoot to the moon next year," said Ozair, noting that Draper's forecast was more based on hype than fundamentals. "We are going to be down for a while. The idea that everything will swing back up is just not going to happen.”
If Binance, which is currently under investigation over market manipulation concerns and questionable finances, goes bust, "another show will fall," potentially bringing bitcoin down as low as $5,000, Ozair added. Meanwhile, a lot of development is coming into the space while some institutional (which are buying heavily discounted assets) and retail players are sticking to bets that the digital-currency market can turn the corner.
"There is a lot of development happening with more metaverse and decentralized technology projects coming" down the pipeline, said Ozair, adding that Starbucks and Warner Music are also making inroads into non-fungible tokens (NFTs), joining the likes of BlackRock, Goldman Sachs and PayPal, which have boosted commitments into the space.
Short Sellers Gain
If institutional participation deepens next year and the U.S. can orchestrate a soft landing, bitcoin could surge above $20,000, Ozair said. So far, however, short sellers are boosting bets against bitcoin with derivatives exchange CME Group's January 2023 contracts priced lower than its spot price. Bitcoin was hovering at $16,500 as of press time after flirting with $70,000 in November last year.
Tuttle is getting ready to make bets against bitcoin proxies too. He is waiting for Coinbase and/or miner Marathon Digital to rally up to their 10, 20 or 50-day moving averages to enter a short position. "If they rally past these resistance levels we will be looking to short into the rally," he said.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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Ivan Castano
Ivan Castano is a seasoned financial editor, corporate content specialist and journalist with over two decades’ experience writing for leading publications including Bloomberg, Forbes, Barron’s, MarketWatch, Euromoney and FT groups, among many other leading titles. He enjoys writing about the emerging markets, corporate finance, technology and investing.
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