Bitcoin, a digital currency which was created as an alternative to the traditional financial system when the major economies sank into financial crisis in 2008, has had a long journey.
The cryptocurrency particularly came into the center spot when its price hit nearly $20,000 in December 2017 and, since then, it has attracted a lot of interest from institutional investors. While bitcoin evangelists do not see "price" as a gauge for the cryptocurrency’s success or failure, more often than not that seems to be the case.
The debate on whether bitcoin will be able to replace traditional fiat has been going on since its inception.
In a new report, UBS has estimated that for bitcoin to replace the U.S. money supply, its price would need to reach around $213,000 levels, or would require dramatic improvements in its network’s processing capabilities, Bloomberg reported. UBS said that bitcoin network’s capacity constraint could continue to hamper its usefulness.
"Our findings suggest that Bitcoin, in its current form, is too unstable and limited to become a viable means of payment for global transactions or a mainstream asset class," the report found.
Recent Price Predictions By Industry Experts
In an official blog post dated July 27, Pantera Capital estimated bitcoin price would be around “$21,000 by the end of 2018, and $67,500 at the end of 2019.”
Last month, Tom Lee, co-founder of Fundstrat Global Advisors, said that he expects to see the price over $20,000 by the end of the year.
In an interview with The Street, billionaire crypto investor Tim Draper said that he expects “Bitcoin trade around the $250,000 mark in 2022.”
A partner at Pfeffer Capital, John Pfeffer said that the price of Bitcoin will reach around $700,000 in the future, adding that bitcoin is the “first viable candidate to replace gold,” Smarteum reported.
In a tweet, John McAfee had said, “When I predicted Bitcoin at $500,000 by the end of 2020, it used a model that predicted $5,000 at the end of 2017. BTC has accelerated much faster than my model assumptions. I now predict Bircoin at $1 million by the end of 2020.”
While bitcoin enthusiasts remain upbeat about the crypto’s price projections, Chainalysis has found its use in commerce to have declined since peaking last September.
According to the UBS report, speculative demand makes up over 70 percent of the change in bitcoin price. It said that while cryptocurrencies could become an alternative asset class, the high volatility in their prices makes them more appealing to speculative investors.