Tim Draper, founder of Draper Associates, on stage at the Web Summit 2022 tech conference.
Ben McShane | Sportsfile via Getty Images
Venture capitalist Tim Draper expects Bitcoin to hit $250,000 per coin by mid-2023, even after a tough year for the cryptocurrency that was marked by industry failures and falling prices.
Draper previously predicted that Bitcoin would surpass $250,000 by the end of 2022, but earlier in November he said at the Web Summit technology conference in Lisbon that it would take until June 2023 for that to happen.
He reiterated that position on Saturday when asked about his stance on his price call following FTX’s collapse.
“I extended my prediction by six months. $250,000 is still my number,” Draper told CNBC via email.
Bitcoin would need to recover almost 1,400% from its current price of around $17,000 for Draper’s prediction to come true. The cryptocurrency is down over 60% year-to-date.
Digital currencies are in the doldrums as tighter monetary policy from the Fed and a chain reaction of bankruptcies at big industrial companies like Terra, Celsius and FTX have put prices under severe pressure.
FTX’s demise has also exacerbated an already severe liquidity crisis in the industry. Crypto exchange Gemini and lender Genesis are among the firms reportedly hit by the fallout from FTX’s bankruptcy.
Last week, veteran investor Mark Mobius told CNBC that Bitcoin could crash to $10,000 next year, down more than 40% from current prices. The Mobius Capital Partners co-founder correctly named the drop to $20,000 this year.
Still, Draper is convinced that Bitcoin, the world’s largest cryptocurrency, will rise in the new year.
“I expect a flight to high-value and decentralized cryptos like bitcoin, and for some of the weaker coins to become relics,” he told CNBC.
Draper, the founder of Draper Associates, is one of Silicon Valley’s best-known investors. He has successfully bet on tech companies like Tesla, Skype and Baidu.
In 2014, Draper bought 29,656 bitcoins seized from US marshals for $18.7 million on dark web marketplace Silk Road. This year he predicted that in three years the price of bitcoin would rise to $10,000. Bitcoin climbed to nearly $20,000 in 2017.
However, some of Draper’s other bets have taken a turn for the worse. He invested in Theranos, a healthcare startup that falsely claimed it could detect diseases with a few drops of blood. Elizabeth Holmes, founder of Theranos, was sentenced to 11 years in prison for fraud.
“The dam is about to break”
Draper’s rationale for Bitcoin’s breakout next year is that there is still a massive untapped demographic for Bitcoin: women.
“My guess is that the dam will burst as women control 80% of retail spending and only 1 in 7 bitcoin wallets are currently held by women,” Draper said.
Crypto has long had a gender gap issue. According to a survey conducted by Momentive for CNBC and Acorns, twice as many men than women invest in digital assets (16% of men vs. 7% of women).
“Retailers save about 2% on every purchase made in bitcoin versus dollars,” Draper added. “Once retailers realize that that 2% can double their profits, Bitcoin will be ubiquitous.”
Payment intermediaries like Visa and Mastercard currently charge fees of up to 2% when cardholders use their card to make payments. Bitcoin provides a way for people to bypass the middlemen.
However, using the digital coin for everyday spending is difficult as its price is very volatile and the coin is not widely accepted as currency.
“If people can buy their food, clothes and shelter all in bitcoin, they will have no use for centralized bank fiat dollars,” Draper said.
“The management of Fiat is centralized and unpredictable. If a politician decides to spend $10 trillion, your dollars will be worth about 82 cents. Then the Fed has to raise rates to balance spending, and these arbitrary centralized decisions create an inconsistent economy. He added. Unlike cryptocurrencies, fiat currencies derive their value from their issuing government.
Meanwhile, the next so-called bitcoin halving — which will slash bitcoin rewards for bitcoin miners — in 2024, according to Draper, will also boost the cryptocurrency as it stifles supply over time. The total number of bitcoins ever mined is capped at 21 million.