The annual Sohn Investment Conference in New York is usually a place where top Wall Street fund managers and Wall Street investors present their best stock options – from Amazon to Valeant Pharmaceuticals. For the first time in the 23-year history of the event, one of these investors used the Sohn congress scene to set up a specific digital investment: Bitcoin.
John Pfeffer, a partner at London’s Pfeffer Capital family, not only bets Bitcoin, but also predicts a high-end target of $ 700,000 – about 75 times higher than Bitcoin’s current $ 9,500.
While Pfeffer did not set any timeframe in its forecast, its target exceeds even the most optimistic predictions of other major investors, such as venture capitalist Tim Draper, who earlier this month predicted that the Bitcoin price would reach $ 250,000 until 2022.
“Bitcoin is the first viable candidate to replace gold,” said Pfeffer, a former partner in private equity firm KKR, to the crowd gathered at Lincoln Center, New York. “So if Bitcoin becomes the dominant form of value storage, it could become a new gold or a new reserve currency.”
Pfeffer’s mathematics works as follows: First, he assumes that Bitcoin can reasonably replace all the gold bars currently owned by private investors – the gold that people hold in a safe or bury in their yard as a way of “parking” the money to something more reliable than paper. (Gold bars are known as “value stores”). “Bitcoin is much easier to store and secure,” said Pfeffer.
The current value of all gold bars owned by individuals is about $ 1.6 trillion, according to Pfeffer. Assuming that there will be 18 million Bitcoin in circulation at a time when the coin will completely replace the gold bars (roughly 17 million Bitcoin have so far been produced, out of the 21 million that may exist), then the presumed Bitcoin value would be $ 90,000 . This is Pfeffer’s most conservative scenario, which gives 8% probability of implementation.
But Pfeffer has even higher expectations for Bitcoin – that it could eventually be for the central banks that they are the traditional currency reserves today. (It is known that governments keep cash in foreign currencies to repay their debts and carry out other cross-border transactions).
“One could imagine Bitcoin displacing some stocks over time,” Pfeffer said at the conference. If Bitcoin’s total value reaches the equivalent of $ 12.7 trillion of all foreign exchange reserves, then this is translated at $ 700,000 for Bitcoin. In this scenario, Pfeffer gives 1% probability – enough for him to make a “small, long-term bet” at Bitcoin, as he said.