One instance of déjà vu could be forgiven. Just like during Bitcoin’s previous bull run, while the Bitcoin price (BTCUSD) is racing past new records, commentators and bidders are, once again, weighing in with sky-high valuations for the cryptocurrency.
Scott Minerd, chief investment officer (CIO) at Guggenheim Partners, recently told Bloomberg that the company’s pricing models suggest Bitcoin could go as high as $ 400,000. As of this writing, Bitcoin is changing hands at $ 22,954. Thursday morning, it skipped past the $ 23,000 mark and peaked at $ 23,653, setting a new record in the process.
Guggenheim Partners does not own Bitcoin. But it has retained the right to set aside as much as 10% of its $ 5.3 billion Macro Opportunities Fund to invest in the Grayscale Bitcoin Trust (GBTC), a Bitcoin holding company that trades in OTC markets. A rise in the price of Bitcoin will drive up GBTC’s share price and generate profits for Guggenheim. The investment firm has been monitoring Bitcoin prices since it was priced at $ 10,000, Minerd said. “Ultimately, we’re going to buy it,” he promised.
- Scott Minerd of Guggenheim Partners says Bitcoin could be worth $ 400,000, based on the company’s pricing model that takes into account cryptocurrency dollar shortages and inflation.
- Seth Ginns of CoinFund has forecast a $ 1 million valuation for Bitcoin based on its four-year halving cycle.
For now, though, Minerd is preaching the gospel of Bitcoin and justifying a high valuation for the cryptocurrency. “It’s based on the relative scarcity and valuation like things like gold as a percentage of GDP. So … Bitcoin really has a lot of gold attributes and at the same time has unusual transaction value,” he said .
According to Minerd, the Fed’s policy of “printing cash” during the economic downturn caused by a pandemic was another reason for the valuation. The Federal Reserve has pumped as much as $ 9 trillion into the US economy since the start of the pandemic. The whirr noisy the Fed’s money printing machine is a contrast to Bitcoin’s capped supply of 21 million. The resulting shortage is supposed to make the cryptocurrency a store of value.
To The $ 1 Million Moon?
For Bitcoin’s current price, Minerd’s price estimate might seem rural. But CoinFund’s Seth Ginns left that estimate in the dust by anticipating a $ 1 million price target for the cryptocurrency. He said the “pattern recognition” of Bitcoin’s four-year cycle, probably the period between its halving periods, meant that a price range between $ 150,000 and $ 400,000 was a “root cause.”
Ginns also made an improbable comparison between the share price movement for electric car maker Tesla, Inc. (TSLA) and Bitcoin, saying the rapid institutionalization of the cryptocurrency could drive it to a range of $ 500,000 to $ 1 million in the next two years. After that, its price would consolidate, he said.