BITCOIN price hit a 40-day high on Tuesday as it climbed to over $9,200 – but one cryptocurrency expert said bitcoin could continue to surge by “hundreds of thousands” if it replaces a major reserve currency.
Bitcoin price suffered a tough winter after banks and officials faced increased pressure to regulate cryptocurrencies, but the cryptocurrency has seen a 40 percent rise from the April 1 low of $6,425.
Speaking at the Sohn Investment Conference, hedge fund manager John Pfeffer predicted that bitcoin will rise to no less than $90,000 and potentially as high as $700,000.
Mr Pfeffer told CNBC: “The bear case is zero. I think people should think about crypto assets, bitcoin, as a venture capital investment. It could go to zero but there’s a chance that they could be worth much more.
“And the case of bitcoin, the $90,000 price would be what it would be worth if bitcoin became equal to private gold bullion holdings, about 1.6 trillion dollars of total value compared to $150 billion or there about today.
“It’s a bet. It’s a risk that I think is interesting and I’d be willing to take.”
He added: “On the higher end, you could get to higher values if bitcoin becomes a major reserve currency i.e. countries begin to take bitcoin into their reserves and in that case, it could reach several hundred thousand dollars.”
The hedge fund manager said the probability that bitcoin could reach several hundred thousand dollars is “lower” but is “certainly a possibility”.
But he claimed bitcoin could reach $90,000 in the “next couple of years”.
Mr Pfeffer said: “$90,000 is, in my view, relatively low bar. That’s only about ten times the currency price. Right now it is mostly retail investors, not many institutional investors, I can see private sector institutional investors helping it get to that price in the next couple of years.
“To be honest, I don’t want to make time point estimates because it is a venture capital bet and that is a long-term thing.
“The higher number of some kind of foreign reserve displacement – that’s clearly a much longer term thing.”
The hedge fund boss said in order to reach a higher number in bitcoin then the cryptocurrency will have to replace a certain percentage of foreign reserves, which includes gold.
Mr Pfeffer said that bitcoin is the “first viable candidate to replace gold the world has seen”.
He added: “In developing countries with collapsed currencies it is more important and could be more for daily use.
“When I think about the displacement argument, I start with gold because I think that gold, frankly, is kind of silly. I mean, we are spacefaring digital society and we are still using a yellow metal as our non sovereign store of value.
“At some point we are going to come up with a better technology for that and bitcoin is the first candidate and we will see if it works.”
Bitcoin price was at $9,225.35 at 08:25 (GMT) on Tuesday, according to CoinDesk. It saw its highest value before Christmas when it reached the monumental price of just under $20,000.
The digital currency has faced criticism by banks and finance experts, with Banking giant Morgan Stanley likening the current market climate of bitcoin to the dot-com bubble that, during its most “exuberant” period rose by 250 to 280 percent.
Head of the Federal Reserve Bank of San Francisco John Williams said there are “a lot of problems” with bitcoin.
He told CNBC: “The setup or institutional arrangement around bitcoin and other cryptocurrencies, first of all they have problems with fraud, problems with money laundering, terror financing. There’s a lot of problems there.”
He added that cryptocurrencies do not “pass the basic test of what a currency should be.”
Bank of England Governor Mark Carney has also been highly critical of cryptocurrencies. He said it is a “privilege” to be part of the financial system and “responsibilities come with those privileges”.
While the ever-present threat of regulation looms over the market, bitcoin can continue to flourish.
The European Parliament voted for tighter regulation against the potential use of cryptocurrencies in money-laundering and the funding of terrorism last week, supporting a previous bill to force exchanges to register.
The vote is just the beginning of a potential series of clamp-downs from major economies who are fearful of crypto-potential.
Read more at: Express