Tim Draper is a renowned Silicon Valley venture capitalist. He is particularly known for being an early investor in companies like Baidu, Skype, Tesla, SpaceX, Twitter, Coinbase, and Robinhood, among others. In July 2014, he participated in an auction (which he won) of some bitcoin seized by authorities from the Silk Road page on the Deep Web. You don’t have to do much math to know that Tim’s friend has made a lot of money with that purchase.
Tim Draper is fond of predictions. They have become a little publicity stunt for him. The predictions are made in a playful tone in the style of a friendly bet. Speaking at the Web Summit 2022 event in Lisbon, Portugal last week, Draper said that his prediction of $250,000 still stands and that this price will be reached in mid-2023. “By the middle of 2023, I expect to see Bitcoin hit $250,000,” Draper said.
In 2014, Draper correctly predicted that Bitcoin would surpass $10,000 by 2018. We now know that this mark was surpassed in 2017. That is to say, the subject has already been right in the past. Nevertheless, On this occasion, eight months from the date, his prediction seems a little more difficult to fulfill. We are talking about an increase of more than 12X in less than a year. It is not a small thing. And we must remember that this miracle must be achieved in the context of much more hostile monetary and macroeconomic conditions.
Bitcoin, in its short existence, has never gone through such complex times. Now, these are times of great volatility and uncertainty. And investors find themselves between a rock and a hard place. Inflation has arrived and does not want to go. The problem is that efforts to lower inflation by central banks can cause a recession. In other words, if no action is taken, inflation will sink us. If, indeed, action is taken (reducing the money supply), a recession is generated. But we can also have both evils at the same time in a stagflation scenario.
Right now, investors, reacting to this uncertainty, are taking a fairly conservative stance. That means big money is looking for some stability and predictability in the dollar and Treasuries. I refer to the tests. How has the S&P 500 performed this year? What has been the performance of Bitcoin during this year? What has been the performance of the dollar this year?
Trust is lost very quickly. But it recovers slowly. In other words, panic is violent and generates large falls. Consequently, the fear of losing becomes greater than the greed to win. Investors need time to regain faith. Time is required. And reasons are required. In other words, 8 months is a very short time for a bigger bullish boom to form than the previous one. During 2020, all the conditions were given to grow aggressively. Money fell from the sky in great abundance. Optimism was through the roof and, despite the problems and challenges of the moment, the future looked bluer than ever.
“There is no reason to have fiat currency,” Tim Draper warns us. So, this statement could be interpreted as the justification for the prediction. I mean, it looks like investors are going to experience a big shift in sentiment in the coming months. The dollar will lose, overnight, its place as a safe haven. In other words, investors looking for stability and predictability will start looking for alternatives. And they are going to find a substitute in Bitcoin (which is by the way one of the most volatile assets out there). Consequently, they will buy with a vindictive greed. Namely, the demand for Bitcoin will arise due to a disenchantment with the dollar. This should be given in 8 months. And it must also happen with a Federal Reserve raising interest rates.
Notably This hypothesis is in direct contradiction to the tendencies. I mean, it contradicts the facts. It sounds very nice in theory. But the evidence reveals another behavior. How can someone so well versed in market dynamics come up with such a daring hypothesis?
One possible explanation is that Draper knows something that we don’t. But it must be something very big. In fact, it must be an event bigger than a pandemic. Because 12X in 8 months is not something very easy to achieve. The price of Bitcoin did not grow that much in 2020. And it did not grow that much in 2021 either. Suddenly, a nuclear conflict could produce such a radical turn in the level of liquidity. Due to the increase in fiscal spending and the monetary stimulus caused by such an emergency, something like this could be possible.
In the political field, Uncle Sam would have to adopt Bitcoin as legal tender for this miracle to happen.. But I am referring to a very broad monetary reform. With guarantees, protections, insurance and all the paraphernalia. Public debt and tax system denominated in BTC, etc. The closure of the Federal Reserve…Or, put another way, there must be a fairly radical liberatory revolution. With this support, the price of Bitcoin could achieve the miracle of growing 12X so quickly and in such difficult times.
Of course there is also another possibility. It is possible that this prediction is a publicity stunt on the part of the billionaire. It is done to cause controversy. And get several headlines in the process. If the prediction doesn’t come true, Tim can accept his mistake like a gentleman. And, in this post-truth age, his credibility will not suffer in the least. People will surely accept the prediction as a game. The matter will be taken with a sense of humor. Because the prediction in this way was made in a fair fight.
Optimistic predictions around the price of Bitcoin always go down very well. Because that’s what bitcoiners want to hear. And prophesying about the end of the dollar is also a pretty popular publicity stunt because that’s what libertarians want to hear. Namely, Tim Draper’s words become irresistible to the media and the community. He gives us something to talk about.
Is it possible for Bitcoin to reach $250K in 8 months? Well, of course it’s possible. Everything is possible. It is probable? No, not likely. In fact, it is highly unlikely. This is a prediction without much foundation. It should not be taken too seriously. In my opinion, it should not be understood as a forecast. HOh, take it as a publicity stunt in the same league as the late John McAfee’s predictions.
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