I’m still bullish on Bitcoin, but there’s no way it’s going to be $250,000 next year

Bitcoin (BTC -0.53%) may be down nearly 65% ​​for the year, but that’s not stopping some high-profile names in the financial and crypto worlds from posting some incredibly bullish future price targets. For example, billionaire venture capitalist Tim Draper recently posted a $250,000 price target for Bitcoin. And he thinks it will get there by June 2023.

Of course, Draper has been wrong before with his Bitcoin predictions. Back in 2018, he famously predicted that Bitcoin would reach $250,000 by the end of 2022. Instead of acknowledging that Bitcoin may need a few more years to reach such an aggressive goal, he simply pushes back the price forecast by six months. So what on earth does he think is going to happen that will turbocharge a 1,470% rally in Bitcoin in just six months?

Draper’s core investment mission

As Draper suggests, a continued “flight to quality” in the crypto market will push investors toward Bitcoin, which remains the most popular, most capitalized crypto on the market. After all the market crashes and crypto contagion in 2022, both private and institutional investors want to put their money in trusted names.

Also, as Draper points out, Bitcoin is likely to become a more popular form of online payment going forward. Instead of hoarding Bitcoin, people will spend it. According to Draper, Bitcoin will eventually become the preferred option when people do all their online shopping. And, Draper suggests, Bitcoin will become so ubiquitous at some point that people will eventually use Bitcoin for all the costs of food, clothing and shelter.

Finally, Draper theorizes that changing demographic trends in who uses Bitcoin will also lead to massive new adoption for crypto. Draper specifically points out that women, who have historically lagged behind men in crypto adoption rates, will eventually embrace Bitcoin in much greater numbers. This could also put upward pressure on the price of Bitcoin.

Image source: Getty Images.

How credible is Bitcoin at $250,000?

While there are parts of this thesis that make sense, it also seems like a recycled investment thesis from 2018 (which it is). Back then, there was no worldwide pandemic, so it made sense to talk about Bitcoin as the future of online payments. But we have seen what has happened from 2019 to 2022: there has been a massive increase in online spending, but no accompanying increase in Bitcoin payment usage. If Bitcoin were to become a ubiquitous form of online payment, this would be the moment.

Also, even the argument that a massive new demographic increase is somehow going to boost Bitcoin to stratospheric heights seems a little overblown. By some estimates, nearly 145 million Americans now own crypto or have invested in crypto in the past. So, crypto has far surpassed its original core audience of early technology adopters and now includes a much broader segment of American society. Yes, there is still an untapped opportunity globally, but I am not as bullish as Draper on the untapped opportunity in the US market.

A completely off-the-chart price prediction of $250,000 just doesn’t pass the smell test. In the long term, surely Bitcoin can reach $250,000. It can even reach $1 million. But in six months? Let’s think back to 2018 when Draper originally made his $250,000 price tag. Back then, Bitcoin was trading at $8,000 and Draper gave the crypto four years to reach its $250,000 target. Now Bitcoin is trading at roughly double its previous price, and Draper has shortened the time window to just six months? And what’s more bizarre is that he expects Bitcoin to increase more than 1470% during a crypto winter.

Finally, remember that Draper has some real skin in the game when it comes to Bitcoin. According to published reports, Draper currently owns 30,000 Bitcoins now worth more than $500 million at today’s prices. Assuming he is a rational economic actor, Draper has a very real interest in talking up the price of Bitcoin to stratospheric levels. The higher Bitcoin goes, the more his wealth increases.

Do I Buy Bitcoin Now?

The growing consensus in the crypto world is that Bitcoin is close to bottoming out if it hasn’t already. Yes, there are still people predicting that Bitcoin could fall to $10,000 in 2023, but many of the Bitcoin price estimates coming out for 2023 call for Bitcoin to rise. For example, California-based crypto hedge fund Pantera Capital predicts that Bitcoin will start rallying in 2023 before hitting $36,000 in 2024. A near doubling in price in two years seems like a much more reasonable goal to me than a stratospheric peak in just six months.

I’m in the camp of the Bitcoin bulls, and I think Bitcoin is still a fantastic long-term investment, even if it doesn’t go all the way to $250,000 by June next year.