Bitcoin has swung wildly this week as traders braced themselves for a Federal Reserve “sledgehammer” that could trigger a crash “worse than 2008.”
The bitcoin price has crashed back under $20,000 per bitcoin after trying to climb above the psychological level earlier this month—pushed lower by a surprise Biden administration warning.
Now, Michael Saylor, the chairman and cofounder of software company turned bitcoin acquisition vehicle MicroStrategy
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“The next logical stop for bitcoin is to replace gold as a non-sovereign store of value asset,” Saylor told MarketWatch this week, adding gold is a $10 trillion asset. “Bitcoin is digital gold, it’s 100-times better than gold and if bitcoin goes to the value of gold it goes to $500,000 per bitcoin.”
Without naming an exact date, Saylor said he expects that to happen within the next ten years, predicting that bitcoin will “institutionalize,” first regaining its position as a $1 trillion asset before exploding to $10 trillion.
In recent months, the world’s largest asset manager Blackrock “opened the floodgates for institutions to access bitcoin,” and investment giant Fidelity is reportedly weighing offering bitcoin trading services to its 34.4 million retail investor base.
However, Saylor warned he doesn’t have a short-term price prediction, saying he has no idea what the bitcoin price will be 12 months from now but noting the extreme price volatility across all asset classes due to the Federal Reserve’s monetary tightening policy.
The bitcoin price “has touched [$20,000 per bitcoin] a few times. I think this is stable,” Saylor said, pointing to the bitcoin price’s moving average over four years for a potential bottom.
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However, traders focused on bitcoin’s short-term price prospects are worried the Fed’s program of historic interest rate hikes could cause further pain for the bitcoin and crypto market.
“There’s more pain for investors in the short term as markets will need to work their way through this new outlook,” Anto Paroian, chief executive at the cryptocurrency hedge fund ARK36, said in emailed comments.
“In the long term, there seem to be little reasons for optimism either, as the Fed expects to continue hiking throughout 2023 and only start cutting rates in 2024.”
Last month, Saylor, who first used MicroStrategy money to buy bitcoin just over two years ago, stepped down as the company’s chief executive to focus on bitcoin buying.
After buying another 300 bitcoin this week, MicroStrategy now holds around 130,000 bitcoin, bought for an average price of just over $30,000 per bitcoin and spending almost $4 billion.