The 4 craziest predictions about cryptos

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Cryp­to mar­kets tum­ble with Bit­coin, Ethereum, los­ing 70% from their peaks!’

Have you seen news head­line like these?

I bet you have.

Cryp­tos made head­lines in 2021 when the price of Bit­coin along with many oth­er alt­coins sky­rock­et­ed to their all-time high.

It’s 2022 and cryp­tos are yet again mak­ing head­lines. But this time around, it’s because of their sharp fall.

The sell-off in the cryp­to mar­ket and the dig­i­tal asset space has esca­lat­ed amid the glob­al eco­nom­ic slowdown.

If you have invest­ed in cryp­tos and are wor­ried, here’s some­thing that might give you some relief.

Take a look at the table below which shows how volatile the cryp­to mar­kets can be.

Short His­to­ry of Bit­coin Crashes

Year

Peak Price (US$)

Low Price (US$)

Fall from peak (%)

2011

                            32 

                       0.01 

-100%

2012

                          260 

                           45 

-83%

2013

                      1,160 

                        380 

-67%

2017–18

                    20,089 

                     3,380 

-83%

2019

                    13,796 

                     6,640 

-52%

2021–22

                    68,789 

                  21,229 

-69%

Data Source: Equi­ty­mas­ter, Yahoo Finance

After all these crash­es, bit­coin man­aged to hit an all-time high last year.

With that in mind, we thought it will be inter­est­ing to see what experts over the world have to say about cryp­tos and what’s their stance.

So we present to you, the top 4 cra­zi­est pre­dic­tions about cryptos.

#1 ‘In the first place, it’s stu­pid because it’s still like­ly to go to zero.’

If you’re won­der­ing who in the world gave such a crazy and bold state­ment on Bit­coin, hold your hors­es. The answer might sur­prise you.

The above words are from none oth­er than leg­endary investor Char­lie Munger.

If you fol­low the cryp­to mar­kets and what’s hap­pen­ing, you know that Char­lie Munger is no fan of bit­coin or any oth­er cryp­to for that instance.

Not just him, but his long-time part­ner and the most suc­cess­ful investor War­ren Buf­fett has also shied cryp­tos away. Both the investors have made hos­tile com­ments toward bit­coin in the past.

Buf­fett has even said bit­coin is “prob­a­bly rat poi­son squared.”

While here’s Munger in his own words:

In my life, I try and avoid things that are stu­pid and evil and make me look bad in com­par­i­son to some­body else – and bit­coin does all three.

In the first place, it’s stu­pid because it’s still like­ly to go to zero. 

It’s evil because it under­mines the Fed­er­al Reserve System.

And third, it makes us look fool­ish com­pared to the Com­mu­nist leader in Chi­na. He was smart enough to ban bit­coin in China.

Agreed that both these investors have their invest­ment ide­ol­o­gy set, but aren’t they a bit harsh? Pre­dict­ing that Bitcoin’s val­ue may go to as low as zero?

Anyways…they have their rea­sons. Buf­fett invests only in things he under­stands. Cryp­tos, being out of his syl­labus, jus­ti­fies his rea­son­ing of not dab­bling in the high­ly spec­u­la­tive space.

For those out there who are like mind­ed as Buf­fett, be proud to have so much in com­mon with a man who has built a twelve-fig­ure for­tune by bet­ting on the right horses.

Just because Buf­fett and Munger don’t believe in the future of cryp­tos does not nec­es­sar­i­ly mean you too should shun them. 

There are experts out there who are so bull­ish on cryp­tos that they believe Bitcoin’s val­ue can go as high as US$ 100,000.

That brings us to the sec­ond crazy prediction…

#2 ‘By tak­ing over gold’s role as a store of val­ue, Bit­coin can reach a val­u­a­tion of US$ 100,000 in the not-so-dis­tant future.

This bull­ish call on Bit­coin is by Gold­man Sachs.

At the start of 2022, Gold­man Sachs pre­dict­ed that Bit­coin could prob­a­bly be the new gold and has the poten­tial to cross the US$ 100,000 mark in com­ing years.

Gold­man Sachs said…

Bit­coin may have appli­ca­tions beyond sim­ply a “store of value”.

Gold­man Sachs’ ana­lysts esti­mat­ed that the pro­por­tion of bit­coin in a port­fo­lio will only increase with time.

If Bit­coin is able to claim a 50% share of the ‘store of val­ue’ allo­ca­tion, the price would pret­ty much exceed US$ 100,000.

Ana­lysts at Gold­man Sachs claim that bit­coin should be con­sid­ered a macro asset.

This is because it has “matured enough”. This means that its behav­iour now resem­bles that of oth­er macro assets.

They also believe that bit­coin is going through a one-time social adop­tion phase. One that could make or break it in terms of returns.

By the way, Goldman’s bold call of US$ 100,000 is almost 5x the cur­rent price of a Bitcoin.

#3 “Accord­ing to our esti­mates, the price of one bit­coin could exceed US$1 m by 2030.” 

US$ 1,000,000.

That’s how high the price of one bit­coin could go by 2030.

Accord­ing to Cathie Wood’s Ark Invest, Bit­coin’s price could exceed US$1 m by 2030 as investors remain focused on its long-term value.

The fund is all praise when it comes to bit­coin and believes it is the most com­pat­i­ble asset with ESG norms.

Our research sug­gests that bit­coin has the poten­tial to trans­form mon­e­tary his­to­ry by pro­vid­ing finan­cial free­dom and empow­er­ment in a fair, glob­al, and dis­trib­uted way.

Cathie Wood, the chief exec­u­tive of ARK Invest and man­ag­er of the pop­u­lar ARK Inno­va­tion exchange-trad­ed fund (ETF) has often praised cryptos.

Back in Feb­ru­ary 2021, the fund man­ag­er which took the world by storm said that a sin­gle bit­coin could be val­ued at US$ 200,000 more than its cur­rent price if more cor­po­ra­tions added the cryp­tocur­ren­cy to their bal­ance sheets.

#4 Sta­ble­coins will become mainstream

This may seem like a high­ly spec­u­la­tive pre­dic­tion for now. But it has a good prob­a­bilis­tic chance of becom­ing a real­i­ty than the three pre­dic­tions men­tioned earlier.

Sta­ble­coins are always sell­ing like hot potatoes.

As cryp­tocur­ren­cy prices tend to vary a huge amount in a short span of time, many don’t like the volatility.

Enter Stablecoins.

Sta­ble­coins are cryp­tocur­ren­cies with­out the volatil­i­ty. They share a lot of the same pow­ers as oth­er cryp­tos, but their val­ue is steady, more like a tra­di­tion­al cur­ren­cy, i.e. the US Dol­lar, Indi­an Rupee, etc.

Apart from investors involved in the cryp­to world, even the top reg­u­la­tors seem to be talk­ing about stablecoins.

As things stand now, Japan has already tak­en the lead in reg­u­lat­ing stablecoins.

The country’s par­lia­ment enact­ed a bill ear­li­er this month clar­i­fy­ing the legal sta­tus of sta­ble­coins, essen­tial­ly estab­lish­ing them as dig­i­tal money.

This is def­i­nite­ly a sign that sta­ble­coins might become main­stream in the com­ing years.

Expose your hard-earned mon­ey or stay away?

Over the past two years, what hap­pened is gov­ern­ments and cen­tral banks all over the world fueled mon­ey print­ing and increased the liquidity.

As it’s in human nature to take risks and avoid the fear of mis­sion out (FOMO), peo­ple gam­bled their mon­ey and put amounts in what­ev­er meme coin or asset class which caught their fancy.

Most peo­ple ignored the dan­ger of get­ting car­ried away as cryp­to mar­kets were boom­ing. They might have earned prof­its in the short term but would be hav­ing a real­i­ty check now.

While we don’t know where Bitcoin’s price will be a year from now or five years from now, we do know that cryp­tos and bit­coins are a rage. You can’t just ignore them.

We at Equi­ty­mas­ter are not against invest­ing in Bit­coins at all.

How­ev­er, an invest­ment like a Bit­coin should not be where you park your max­i­mum sav­ings. They should be the high risk-high return part of your over­all corpus.

Before you invest in cryp­tos, we rec­om­mend you take a look at Nithin Eapen’s Cryp­toMas­ter course. This should help you get start­ed in the world of cryptos…

Equitymaster’s take on cryp­tos is simple.

We don’t get cryp­tos. It’s some­thing that has caught our imag­i­na­tion, but we just can’t fig­ure out a way to val­ue it. Fun­da­men­tal­ly speaking.

Our “fun­da­men­tal” take on cryp­tos is in line with the approach any­one should have when dab­bling in a space one does not understand.

Invest only what you can afford to lose. Noth­ing more.

Dis­claimer: This arti­cle is for infor­ma­tion pur­pos­es only. It is not a stock rec­om­men­da­tion and should not be treat­ed as such. 

This arti­cle is syn­di­cat­ed from Equitymaster.com
 

 

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