Bitcoin Will “Reach $1 Million” Despite FTX Implosion

Bitcoin Will “Reach $1 Million” Despite FTX Implosion

A prominent investor is sticking by her bold prediction that Bitcoin will hit $1 million by 2030, despite the worsening fallout from the FTX collapse.

Cathie Wood, founder and CEO of Ark Invest, made the bullish prediction in April of this year, when the largest cryptocurrency was trading around $41,000 – well below its peak just a few months earlier.

Since then, it’s been a nightmare year for crypto investors, with Bitcoin shedding more than half of its value after a series of high-profile implosions including Terra/Luna coins, hedge fund Three Arrows Capital, and lender Celsius.

The stunning collapse of FTX — one of the largest crypto exchanges — earlier this month could have its biggest contagion effect yet, given the Bahamas-based company’s vast web of affected creditors.

But Ms. Wood, a major investor in US-listed crypto exchange Coinbase, told Bloomberg on Wednesday she stands by her $1 million per bitcoin demand.

That would be an increase of more than 6000 percent from the current price of around $16,200.

“Yes — you know, sometimes you have to do a combat test, you have to go through crises to see the survivors first of all, but really to test the infrastructure and the thesis,” she said.

“And again, we think bitcoin will come out of this thing smelling like a rose.”

She acknowledged that the recent market turmoil could put institutional investors off for a while.

“Once they’ve done their homework and seen what happened here, I think they’ll feel more comfortable going into bitcoin and maybe ether as a first stop because they’ll understand it better,” she said.

Ms. Wood insisted that the underlying blockchain technology is solid.

“If you look at the Bitcoin blockchain and Ethereum, you’ll see that the infrastructure, the technology, hasn’t taken a hit throughout this crisis,” she said.

“In fact, Bitcoin’s hash rate is at an all-time high, and that’s a real indication of the security of the network. For Ethereum we see a total value of $24 billion, which is an all-time high. So the infrastructure works wonderfully.”

She argued FTX’s collapse was “cheating,” but nothing on the scale of Lehman Brothers or even Bernie Madoff.

“Put a little perspective on the situation here – the entire crypto-asset ecosystem is an $800 billion ecosystem. Apple is three times bigger in terms of market cap,” she said.

“A lot of people say, is this another Lehman, could we see a domino effect here? The banking system in 2008-09 [was] Trillions and trillions of dollars. At the moment it seems FTX [owes] $5-10 billion to creditors. Lehman had claims of $1.2 trillion. Madoff had $64 billion in claims.”

Over the weekend, FTX’s administrators revealed in court filings that the company owed its top 50 creditors a staggering $3.1 billion.

An estimated one million customers and other investors are facing billions of dollars in total losses, including more than 29,000 Australian users who have lost “very significant” sums.

Three out of four lost money

It comes after a study published last week found that about three-quarters of people who bought Bitcoin had lost money.

Economists at the Bank for International Settlements, an institution widely regarded as the central banks of central banks, analyzed data on cryptocurrency investors in 95 countries between 2015 and 2022.

“Overall, back-of-the-envelope calculations suggest that around three-quarters of users have lost money on their Bitcoin investments,” they said in their study.

During the period under review, bitcoin price rose from $250 in August 2015 to a high of almost $69,000 in November 2021.

The number of people using smartphone apps to buy and sell cryptocurrencies increased from 119,000 to 32.5 million over the same period.

“Our analysis showed that Bitcoin price increases globally were associated with increased retail investor entry,” the researchers wrote.

Additionally, they said they found that “as prices rose and smaller users bought Bitcoin, the largest holders (the so-called ‘whales’ or ‘humpback whales’) sold – and made a return at the expense of the smaller users.”

The researchers had no direct data on individual investors’ gains or losses.

However, they were able to extrapolate based on the bitcoin price when new investors started using cryptocurrency trading apps and the roughly $20,000 it was worth over the past month.

The study also found that the largest segment of new cryptocurrency investors was males under the age of 35, at around 40 percent, and is widely described as the “most risk-taking” segment of the population.

Researchers found that most cryptocurrency investors viewed it as a speculative investment, and that young men tended to be more active in trading in the months following a big spike in bitcoin price.

They said the surge in investors following price hikes should raise concerns about the need for more consumer protection.

— with AFP

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