If his prediction is correct, bitcoin would hit a $2 trillion market capitalization. That’s about a third of gold’s current market cap and 1/40 of the worldwide money supply. ‘Pomp’ cites a 70-75 percent conviction in his prediction.
“I believe that Bitcoin will reach a $100,000 price point before December 31, 2021. My current confidence level of this happening is around 70-75%.”
The reason for Pompliano’s bullish price target is simple supply and demand economics.
Bitcoin’s total supply is fixed at 21 million giving it a hard scarcity. If demand rises, the price must inevitably move upwards.
“Bitcoin is a fixed supply asset with a disinflationary supply schedule. Over the next ~2.5 years, there will be incredible increases in demand, while the total supply remains fixed and the new daily supply is decreased by 50%”
Pompliano is referring to bitcoin’s halving event in May 2020 whereby daily BTC output will be cut by 50 percent. This “supply shock” which occurs every four years has historically triggered a huge bitcoin price bull run.
Investment firm Grayscale released a report which reveals the halving event is not yet priced into the market.
Of course, Pomp’s theory only holds true if there’s demand, but he points to at least three major drivers:
1. Institutional adoption. His digital asset fund has already seen capital inflows from traditional pension funds. With the likes of Fidelity entering the space, he sees huge volumes of institutional money entering the space, catapulting the bitcoin price to new highs.
2. Bitcoin exchange-traded funds (ETFs). Pomp believes we’ll see a handful of ETFs approved by the Securities and Exchange Commission (SEC), making it easier for Wall Street to get exposure to crypto.
3. Poor traditional market performance. In a low-interest world with increased global instability, Pompliano thinks investors will look to bitcoin as traditional market returns stall.
Pomp admits the road to $100k will be a rocky one with multiple pullbacks and corrections along the way.
“I anticipate that there will be numerous 20-30% drawdowns from new all-time highs as the asset continues to appreciate in value.”
This is familiar territory for bitcoin. As CCN.com reported, the previous bull-market saw at least nine healthy bitcoin price retracements on the way to its record $20,000.
“If history repeats, there should be plenty of strong pullbacks on the way to next peak all-time high. There were at least nine 30%+ pullbacks from last cycle accumulation and uptrend.” – Josh Rager, cryptocurrency trader.
Pompliano correctly saw bitcoin falling to $3,000 in October 2018 before recovering, but that doesn’t mean the $100k price target will materialize. Even Pomp admits the worst-case scenario is a “complete loss of invested capital.”
As always, this is not financial advice. Do your own research and don’t invest more than you’re comfortable losing.
Click here for a real-time Bitcoin price chart.