The Wall Street Analyst Who Suggested Bitcoin Could Reach $100,000 Ten Years Ago Now Says There Is Little Chance of It Replacing the U.S. Dollar Completely and Reaching $5 Million

admin December 10, 2024

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The Wall Street Analyst Who Suggested Bitcoin Could Reach 0,000 Ten Years Ago Now Says There Is Little Chance of It Replacing the U.S. Dollar Completely and Reaching Million

In December 2013, a Wall Street analyst working at a boutique outside of the most popular banking brackets published what may be the first research report on an interesting digital asset called. Bitcoin (CRYPTO: BTC). Have you ever heard of it?

Working for Wedbush at the time, Gil Luria in his report said many things about Bitcoin. He called it a disruptive payment technology and said that there are “significant possibilities that Bitcoin (a specific currency / channel) may not succeed.” Luria also called it a “safe haven currency” and said that there are situations where Bitcoin can trade at 10 to 100 times its current price. Bitcoin traded for abut $1,000 at that time. All in all, that’s a pretty good research note when you consider that Bitcoin briefly surpassed $100,000 earlier this month.

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In a new report released more than ten years later with his current company, DA Davidson, Luria, and his partner Alexander Platt, say that after everything that Bitcoin has achieved, now it is unlikely that the symbol can completely replace the American dollar again. reach a maximum of $5 million per token. Here is the reason.

In 2013, Luria laid out a range of outcomes and a price target for Bitcoin. Since then, Bitcoin and its network have overcome every challenge thrown their way including countless competitors. It also sees billions of dollars being transferred through its network. After such gains, Luria now predicts a small chance of Bitcoin one day replacing the US dollar:

We will assign a 1-2% chance to that outcome, which would be enough to explain the current stock price. Since the world’s money supply is one hundred billion dollars, bitcoin becomes [All of] The currency can mean a value close to $5 million per bitcoin. If one believes that there is a 1-2% chance of this result, and that there are other useful conditions for the use of the bitcoin network besides that, the current price of 100,000 will show that.

While a 1% to 2% chance doesn’t sound like much, Luria wrote in his report that he wouldn’t have thought of such a scenario ten years ago. He may have placed a 0.1% chance of this happening five years ago, so his chances have increased significantly. Ultimately, Luria believes that the growing acceptance of Bitcoin could turn his thesis into a “self-fulfilling prophecy.”

Bitcoin recently received a standing ovation from Federal Reserve Chairman Jerome Powell, who described Bitcoin as a rival to gold — and thus a way to prevent inflation. Luria believes that Bitcoin’s primary utility is as a store of value. Bitcoin has in many cases traded like a high-growth technology stock. However, Luria believes that Bitcoin’s low correlation with inflation is because it lives in a cash-strapped US economy due to the Fed’s easy money policies since the Great Recession.

Luria also noted that Bitcoin’s second best use is as a speculative trading asset. Strong liquidity, around-the-clock trading, and a constant flow of news make Bitcoin “the perfect trading asset.”

I don’t think anyone can answer this question with any real certainty and making long-term price predictions is a fool’s errand. However, with Bitcoin’s peak $100,000 nothing is impossible so I think Luria’s 1% to 2% chance is probably the right test.

Still, the greenback has proved formidable in recent years. Although not at a peak in 2022, the US dollar is as valuable as it has been since the early 2000s. President-elect Donald Trump has promised to implement policies such as further tax cuts and tariffs, which are likely to strengthen the dollar. US domestic production also looks promising at the moment. Of course, this could change quickly as low interest rates and signs of a weak economy emerge. But the US dollar is still the world’s reserve currency.

Investors should focus less on Bitcoin’s price direction and more on how it can be used in a broader portfolio. There is growing evidence that it can stem inflation and may serve as a safe haven in times of uncertainty due to national events or if the US government experiences additional financial problems.

This is why I think investors can at least hold Bitcoin as a long-term asset. At the end of the day, while Bitcoin trades in volatility, those who hold it for the long term are likely to see better returns than most.

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Bram Berkowitz has positions in Bitcoin. The Motley Fool has positions and recommends Bitcoin. The Motley Fool has a policy of disclosure.

The Wall Street Analyst Who Suggested Bitcoin Could Reach $100,000 Ten Years Ago Now Says There Is Little Chance of the US Dollar Changing and Reaching $5 Million was first published by The Motley Fool.

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admin December 10, 2024

0 0 4 minutes read