Bitcoin on motherboard
getty
Venture capitalist Tim Draper has been very visible the past few years saying that bitcoin will hit $250,000 by the end of 2022 or early 2023. Trip Chowdhry at Global Equities Research doesn’t have the following that Draper has but his $4 million price target is certainly more bullish than Draper’s.
Bitcoin technology is configured so that there will only be 21 million bitcoins created. Currently there are approximately 18.8 million in circulation priced at around $41,500. This makes the market cap of all bitcoins right around $780 billion.
To put this in a bit of perspective, Apple
AAPL
MSFT
If bitcoin reaches Chowdhry’s $4 million target and all bitcoins are created, that would make the cryptocurrency’s market cap $84 trillion. Even Draper’s target of $250,000 would make them worth $5.25 trillion.
Bitcoin price chart
StockCharts.com
Chowdhry’s 5 reasons bitcoin can reach $4 million
Trip Chowdhry has 5 reasons that a single bitcoin will be worth $4 million.
1) Bitcoin is “elbowing” for Renewable Energy
Chowdhry believes that as bitcoin’s price increases the number of miners and systems to create a bitcoin will increase. This will lead to higher demand for renewable energy to mine them.
I agree that as its price moves up that there will be more miners and bitcoins created. I don’t see the connection between an increase in energy demand, either renewable or fossil fuels, that drives an increase in bitcoin prices.
2) Bitcoin to get a boost from the IRS
Chowdhry points out that Bitcoin transactions under $10,000 won’t have to be reported to the IRS under proposed legislation and therefore any gains won’t be taxed. This could lead to some increased demand but keep in mind this is proposed legislation, which could be changed in the current bill before Congress or afterwards.
It appears that currently wash sale rules don’t apply to cryptocurrencies. An investor can sell bitcoin if they have a loss and not have to wait the 30 days that is needed when a stock is sold and re-bought to harvest a tax loss.
3) The SEC is supporting bitcoins on public companies balance sheets
Chowdhry believes that since three companies (MicroStrategy
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TSLA
This is another stretch to say every company and Mutual Fund will be buying bitcoins. Huge majorities of CFO’s are too conservative to have a very volatile asset such as bitcoin on their balance sheet. If the price turns down the number of shareholder lawsuits will skyrocket.
It would not be surprising to see a good number of…
