The cryptosphere went crazy this week after Reddit co-founder Alex Ohanian said that Ethereum would reach $15,000 by year’s end. He amended his comment, however, and stated that he had meant to say $1,500. Meanwhile, he predicted that bitcoin would end the year roughly where it started – at $20,000.
Bitcoin’s biggest bull, venture capitalist Tim Draper, did the opposite several weeks ago; after tweeting that bitcoin would hit $25,000 in 2022, he apologised in a subsequent tweet and revised his prediction by an order of magnitude to $250,000. Draper famously predicted back in 2014 that bitcoin would hit $1,000 by 2016, followed by $10,000 in 2017 – two predictions that in the end were vindicated.
Bitcoin has recovered to nearly $10,000 at the time of writing, driven by rapidly relaxing fears of regulation and increased institutional interest in the space. In the last few weeks, Goldman Sachs has opened bitcoin trading desk in its commodities division, while George Soros’ family fund announced that it would begin taking long positions in cryptocurrencies.
Draper, however, reckons that it will take a lot more than institutional interest to boost the profile of cryptocurrencies. Instead, he foresees more and more people transacting in cryptocurrencies rather than fiat currency. To support his prediction of bitcoin at $250,000, he thinks that the total fiat market capitalisation will fall from $80trn today to roughly $30trn, giving cryptocurrencies a total market capitalisation of nearly $100trn.
Ohanian is less bullish on bitcoin and reckons that in the long-term Ethereum will surpass the original cryptocurrency due people “actually building things on it”. Yet Ethereum is still not without its flaws: at this week’s Toronto Ethereum developer conference, co-founder Vitalik Buterin again struck a sombre tone regarding the platform’s scaling problems. Several months ago, the entire platform nearly ground to a halt as the Ethereum-based game CryptoKitties went viral.
Clearly, there’s a long way to go before Ethereum scales into Web 3.0 and bitcoin becomes a major medium of exchange. Yet, many of the world’s top engineers are currently tackling these problems. Ethereum has a solid pipeline of scaling solutions – Plasma, Loom, Raiden, state channels and sharding to name but a few – while bitcoin is experimenting with its own Lightning network.
Although bullish cryptocurrency predictions always look ridiculous when they are made, it’s clear that despite a downtrend in the past few months, the overall trend remains up. There is still everything to play for and with some of the brightest engineering minds working on these projects, Draper’s estimate might once again be proven correct come 2022.