Could Bitcoin’s price be multiplied by 100 soon? This billionaire investor is convinced!

The crypto– the original coin was invented by an anonymous Satoshi Nakamoto in 2009and reached a market value of $ 1 trillion in 2021, although it has since fallen under that brand.

The question of the value of bitcoin, as an asset class, has long been a subject of debate among its proponents and is central to the purpose of bitcoin, which most proponents tend to view as a form of digital gold.

Like gold, a precious metal whose volume is limited by its rarity, the supply of bitcoins is limited to 21 million units, although all bitcoins will not have been mined until around 2140. due to the mathematical halving of bitcoin rewards for miners.

Due to the argument that bitcoin is a form of digital gold, many believe that the total value of bitcoin should approximate that of all the gold in the world, or around $ 12 trillion today. The market capitalization of being Bitcoin currently $ 770 billionachieving the full value of global gold would give Bitcoin holders a return of over 1,600%, but a billionaire investor thinks Bitcoin should be worth much more.

Forget gold, go Bitcoin

At the Bitcoin 2022 conference held in Miami earlier last week, Peter Thiel, the billionaire co-founder of Paypal and first investor in Facebook, said in the keynote of the conference that the global stock market, and not gold, is the best analogue of the protection potential bitcoin market. See also: Unusual: You can buy this rock legend’s mansion with … cryptocurrencies..

Mr. Thiel said: “Bitcoin’s real competitor is not Ethereum (CRYPTO: ETH) – it’s a payment system. It is not even gold. It’s something like the S&P 500. It’s the stock market as a whole ”. He continues: “The benchmark for bitcoin is not gold but stocks, and the question is why there can be no parity between bitcoin and stocks. Why shouldn’t we be talking about something closer to 100 to 1? The 100 to 1 ratio was a reference on his slide to global stocks worth $ 115 trillion, while bitcoin is worth just under $ 1 trillion.

Is Thiel right about bitcoins?

Thiel has been a key player in how money works in the global economy since 1999, when Read Also: Is Polkadot (DOT) Cryptocurrency Dead? Long live Parody Coin (PARO) and Caprice Finance (CFT)?. he co-founded Paypal. So it’s worth hearing his thoughts on bitcoin, the cryptocurrency that some say is set to be the next iteration of money. But it’s important to understand that Thiel’s argument that bitcoin hits $ 115 trillion is not based on its intrinsic value. This is an argument that bitcoin should be an equally valuable asset class for institutional investors and should therefore receive an equal level of investment. Mr. Thiel pointed this out later in his speech when he faced business titans including Warren Buffett, Jamie Dimon, CEO of JP Morgan Chase and Larry Fink, CEO of Black rockstating, “If you have these big institutional investors, they have to allocate some of their money in bitcoin when they run state pension funds in the US, or they get trillions of dollars in assets. When they choose not to put their money into Bitcoin, it’s a choice. deeply political. We need to put pressure on them. “

According to Thiel, the reason bitcoin isn’t worth $ 115 trillion yet is because fund managers aren’t investing enough in it. He calls it a political choice, as the famous libertarian sees bitcoin as a crusade against fiat currencies or government control.

But there is something overturned in this argument. Global shares, i.e. all listed companies bag globally, they are worth $ 115 trillion because those stocks represent companies, such as Apple or Buffett’s Berkshire Hathaway, which generate trillions of dollars in annual profits. They are not worth $ 115 trillion because institutional investors have billions of dollars to put somewhere and they have chosen the stock arbitrarily.

Thiel also ignores the fact that bitcoin is not a productive asset like stocks are. The valuation of him, like that of gold or even an NFT, is an article of faith. A bitcoin today is only worth around $ 40,000 because a group of people, many of them speculators, decided it. It has little practical value.

And what does this mean for Bitcoin?

The founder of bitcoin is Read also: Cryptocurrency: This security flaw has allowed the creation of infinite ETH tokens ..!.anonymousand there is no CEO to introduce cryptocurrency. In this void, Mr. Thiel’s speech takes on further importance, as he is one of the biggest advocates of cryptocurrency. But the speech was just as noteworthy for what it lacked as it was for what Thiel spoke about.

He has never addressed the usefulness of bitcoin as a medium of exchange. In fact, he gave that quality to Ethereum, arguing that Bitcoin was the “gold” of cryptocurrencies, which represented a store of value, while Ethereum was the “Visa” of cryptocurrencies, used to carry out financial transactions.

Most of Thiel’s speech was devoted to destroying bitcoin’s detractors and justifying the $ 115 trillion valuation. Thiel played the game of the masses by inflating the currency and coming up with the price target astronomical of 115 trillion dollars. Like others before, the speech revealed that bitcoin can be better understood as a cult rather than an asset class. In other words, it’s an article of faith – which can make you rich if you get enough people to buy it – rather than an item of real value. His main argument in favor of bitcoin is more political than economic. A well-known libertarian, he sees bitcoin as a way to escape government control and circumvent the deflationary nature of fiat money and taxes.

This political point is a well-known argument in favor of bitcoin, and it’s true that bitcoin has been used in countries like Venezuela, plagued by civil unrest and hyperinflation. But this has nothing to do with bitcoin replacing stablecoins like the dollar.

It is also worth noting that bitcoin tends to be traded as a risky asset rather than a store of value, and particularly plunged when war broke out in Ukraine. When investors “flee to safety”, they flee bitcoin.

No one knows where the price of bitcoin will go now, but the favorable winds that supported its rise in 2020-21, such as the pandemic halt and the increase in the money supply, are fading.

Mr. Thiel seems to believe that the next significant rally bitcoin will require buy-in by institutional investors, but two major obstacles stand in the way of this happening soon. Cryptocurrency is too volatile for most fund managers to invest in and bitcoin has yet to prove why it should be worth $ 1 trillion, let alone $ 115 trillion.

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