Can Bitcoin reach $100,000 in 2022?

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Among cryptocurrencies, many analysts like to place aggressive price targets on Bitcoin (CRYPTO:BTC). On the January 5 episode of “The Crypto Show” on Backstage Pass, Fool.com contributor Chris MacDonald and Eric Bleeker of The Motley Fool discussed some of the price targets around Bitcoin and the question of whether if this token could reach $100,000 this year.

Eric Bleeker: I wanted to scour the internet and then just capture some of the predictions for crypto coming in the year. Maybe by 2023 we can revisit some of them, see how they’re doing, but gauge what we think of each one.

The first will be a prediction of Bitcoin at $100,000, I know if you’ve been a longtime viewer of the show and saw our last show that we aired live before you had the holiday interviews. We talked about Bitcoin surpassing $500,000 and Cathie Wood’s prediction about it. Goldman Sachs (NYSE: GS) isn’t as ready to go for a 10x prediction, but they’ve gone for $100,000.

It is based on a hypothetical situation, where Bitcoin is currently at 20% of what they call the store of value market. They say it’s float-adjusted, which I don’t know exactly, but the float-adjusted market cap is $700 billion. It is the total value of gold available for investment. I should say the total value of gold used for investments, $2.6 trillion, I believe the overall gold mark is closer to $10 trillion, but I haven’t quite got it done by hand.

Their hypothetical 50% market rise would take Bitcoin over $100,000 producing a compound annual return of 17%, and there’s a small typo there at 18%, and they say Bitcoin rising by against gold, a most likely scenario, putting low confidence behind it.

As I alluded to at the start of the show, this all comes against the backdrop of Bitcoin’s dominance, which proportionally drops the overall crypto market to 39.4%. We have a moment where Bitcoin is not horribly off recent highs. Its recent high was 69,000, it was a brief spike there. I think before this show it’s about $46,000, $47,000. This is a moment of relative weakness for Bitcoin.

Chris, what are you buying in terms of this store of value argument?

Chris MacDonald: I think that’s definitely one of the fundamental ways investors try to value Bitcoin versus gold as a store value. This analysis is something that makes it easy to understand for the average person.

Why would you invest in a digital token as market value? Well, it’s the same thesis as to why anyone would buy gold.

There are very prominent figures such as Warren Buffett who have pointed out that why would I buy gold, it just sits there, doesn’t really do anything, it’s not productive, and the same goes for Bitcoin. But, it’s a market value, and against the US dollar, it acts as a currency hedge.

There are certain attributes that make sense in this environment, especially with inflation being what it is, and people are worried about the strength of the US dollar, but they’re also worried about how stocks could behave in this environment.

One of the things behind Cathie Wood’s $500,000 price target was that there was a low correlation between Bitcoin and other assets like stocks. There are several factors here, I think Goldman Sachs is more focused on the gold argument and that makes more sense. Just because it’s so much easier to understand, there’s a fundamental basis for it when you think about how gold is valued.

But as you said, there are currently other projects eating away at Bitcoin’s market share to the extent that this continues remains to be seen and there are risks to this argument as well. Gold has been around for tens of thousands of years and Bitcoin has been around for 13 years, it just celebrated its 13th birthday. It’s proven, proven against other cryptocurrencies in the market right now, but this case that Goldman Sachs presents is probably one of the easiest for the average retail investor to understand.

This article represents the opinion of the author, who may disagree with the “official” recommendation position of a high-end consulting service Motley Fool. We are heterogeneous! Challenging an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and wealthier.

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