In a recent interview, Hong Fang, who is a former VP at Goldman Sachs and the current CEO of crypto exchange OKCoin, explained why she believes that the price of Bitcoin could reach $100,000 by 2021 and $500,000 by 2030.
On 30 August 2019, San Francisco headquartered OKCoin, which was founded in 2013, announced that the addition of Fang, who was an early investor in OKCoin, as Chairman of OKCoin and Chief Operating Officer (COO) of OK Group.
This is what she said at the time of the above announcement:
“I fundamentally believe that blockchain and cryptocurrencies will change the global economy in a profound way that none of us are yet to fully envision. I also believe that OK Group and OKCoin are playing crucial roles in this revolution. Such underlying conviction was why I led investment in OK Group in the first place even before Bitcoin’s 2017 historic run.”
Then, on 6 March 2020, OKCoin announced that on 31 March 2000 Fang would become the new CEO of OKCoin.
On November 19, the OKCoin CEO said in an op-ed for CoinDesk that “there is a reasonable path for the price of bitcoin to reach over $500,000 in the next decade and that “BTC is likely to hit $100,000 in the next 12 months.”
In that article, Fang explained why 2020 has been a “milestone” year for Bitcoin:
“The coronavirus pandemic has brought emotional and economic stress to many people on a global basis. On top of that, 12 years after the 2008 financial crisis and the publication of the Bitcoin white paper, we are reminded how easily our economy could be flooded with new money printed out of thin air; $3 trillion in new money was created in just three months in the United States, about 14% of U.S. GDP in 2019. The U.S. was not alone.
“In 2020, it has been extremely hard for responsible savers to find reliable, real yields to preserve their hard-earned wealth. American middle-class families have had to either accept zero to negative interest rates at banks and debasement risk or bet in the all-time-high equity market when the real economy struggles, not knowing when the music will stop. In other countries, people must fight an uphill battle everyday to simply preserve the earning power of their salaries.”
Next, she explained how Bitcoin’s current bull run is different from the one in 2017:
“Bitcoin’s current run-up is characterized by more vocal institutional endorsement: Square and MicroStrategy allocate treasury cash into bitcoin; the Office of the Comptroller of the Currency (OCC) allow U.S. banks to offer crypto asset custody; PayPal enabling crypto buying and selling; Fidelity making a case for 5% asset allocation and doubling down on crypto engineer recruiting; well-established traditional asset managers including Paul Tudor Jones and Stanley Druckenmilller announcing public support for bitcoin. The mainstream momentum is building up.
“For the first time since its historic inception, bitcoin officially entered mainstream media as ‘digital gold,’ a legit and credible (and liquid) alternative asset to consider for both individuals and institutions.”
She then outlined three potential scenarios in which the Bitcoin price could reach $100,000 in the next 12 months and $500,000 within the next decade:
- “1-2% US household wealth allocation” (this would lead to a $228,000–$456,000 price range by 2030)
- “2%-3% of global high-net-worth individual allocation” (this would lead to a $70,000–$105,000 price range)
- “Catching up with gold” (assuming that Bitcoin’s market cap could rise to 20%–25% of gold’s market cap, that would lead to a $80,000–$110,000 price range)
“I think it’s back to my previous assumption that we are in a different phase today versus 2017. I think in 2017 the Bitcoin is really at a collectible phase ,where a lot of the speculative trading is driving the demand, so it’s really hard to come up with a solid supply and demand model for estimating the value.
“I think today we’re at a very early stage of seeing Bitcoin as a story of value and that’s also where we see a lot of the demand coming in that’s actually launched from holders… who have a stronger belief in in Bitcoin’s value proposition as long-term store of value.
“So, in that case, I’m making a very conservative assumptions to some point in counting for the the timing uncertainty: that we have no crystal ball into the future, so we don’t know whether this will happen in the next 12 months or 24 months or six months, but looking at what we have today, seeing all the institutional endorsement building up and Fidelity coming out with a report officially saying ‘you know, we recommend having 5% allocation of your wealth into Bitcoin because it has all the good things and it’s also unrelated’.
“There’s not a lot of correlation with traditional assets. So, if we take just 2% of the global high net worth individuals… and do that math, it can easily get us to that $100,000 price point.”
Another person who believes that Bitcoin could eventually replace gold as the store of value asset of choice is Binance Co-Founder and CEO Changpeng Zhao (aka “CZ”), who last week gave an interview to Channel News Asia (CNA), which is an English-language TV news channel based in Singapore.
When asked how likely it was that Bitcoin replace gold, CZ replied:
“It’s bound to happen. It’s inevitable. I think Bitcoin is compared to gold in a lot of ways. It does have a lot of the properties of a store of value, but it has so many other advantages. Gold is not very divisible. If you want to sell half of a gold bar, it’s kind of hard. If you want to sell half of a gold ring, it’s kind of hard.
“Gold is not very easy to transfer; you have to meet somebody physically to actually transfer the gold. It’s relatively heavy to carry; if you want to carry it around airports, it’s really tricky as well. It’s hard to store. You have to have physical space.
“It’s not easy to verify. You don’t know the density of the gold you’re getting, whereas with Bitcoin you’re always guaranteed that if you get some Bitcoin, you get some Bitcoin. And gold is not 100% limited supply. It’s rare, but if somebody discovers another gold mine, there could be more supply. And Bitcoin is very limited [in] supply. The way I view it is gold is a very good store of value, but it’s use case is sunsetting, whereas… Bitcoin’s definitely the future.”
The views and opinions expressed by the author are for informational purposes only and do not constitute financial, investment, or other advice.