Until three weeks ago, Bitcoin was pretty much a dead fad to most investors after the cryptocurrency lost 80 percent of its dollar value in just a few months in 2018 and never recovered.
But over the weekend of March 31, Bitcoin and a few other mainstream cryptocurrencies staged a surprising “dead cat bounce,” surging more than 20 percent in two days and having held steady at above $5,000 since then. Is it a sign of Bitcoin finally gaining ground as a viable digital currency or is it another foaming bubble to lure shortsighted opportunists into the crypto game?
In either case, the latest boom could be a positive step for the cryptocurrency community, said Tim Draper, a seasoned venture capitalist known for his bullish stance on Bitcoin throughout the cryptocurrency’s dramatic rises and falls since its creation.
Draper, who successfully predicted Bitcoin’s $10,000 milestone in late 2017, has said that Bitcoin’s dollar value could skyrocket to $250,000 in less than four years, based on the assumption that Bitcoin will replace six percent of all the government-backed currencies in circulation today.
“I expect that dollars and other political currencies will be eclipsed by Bitcoin, but it will take some time,” Draper told Observer in an interview last week. “In the meantime, over 99 percent of all transactions are still done in political currency. That will change though. In Japan, for example, many retailers price their products in Yen and in Bitcoin.”
Widespread adoption of Bitcoin and other cryptocurrencies has yet to pick up speed in the U.S. For now, federal regulators and most investors largely treat cryptocurrencies as securities, whose real value is measured in dollar terms.
That is not necessarily a bad thing, though. “You are doing society a favor by building more liquidity into the system for Bitcoin,” Draper said. “The more people recognize Bitcoin to be a common currency, the more frictionless the world economy [is], and the world becomes wealthier.”
Draper’s venture capital firm, Draper Associates, has invested in a number of Bitcoin and blockchain startups. His latest bet is a $1.25 million investment last December in Bitcoin payment platform OpenNode. Operating similarly to a credit card company but with lower fees, OpenNode aims to facilitate the use of cryptocurrencies in everyday spending activities such as ordering a coffee at Starbucks and checking out on Amazon.