What's Next: Bitcoin $20K Or $35K? - Free Websites, Share News And Posts Publicly

SAT, MAY 06, 2023

What’s Next: Bitcoin $20K or $35K?

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I wrote this piece almost exactly a year ago, but the ideas hold up. So in this On the Other Hand weekend read, revisit the arguments about where Bitcoin will go next. (For the record, last year the second argument won; Bitcoin dipped below $20K last June, went below $16K in November, and has rebounded to near $30K today.)

Bitcoin early this morning touched its lowest level since late 2020, dropping below $26,000. That’s the latest milestone in a week that has seen the cryptocurrency fall more than 20%. So which will come first, more losses or a rebound? Bitcoin 20,000, or Bitcoin 35,000? Jon Fortt is here to weigh in.

JON:

“Bitcoin 35,000.

Hear me out. To hit 20,000, it would have to drop by 25% from here. While that’s clearly possible, it’s unlikely. Why? Well, even though Bitcoin is behaving like a risk asset now, there’s a base of owners who believe in the underlying utility of the currency and will continue buying it as the price drops. Once the speculators throw in the towel, the people who owned it for the right reasons will provide more stability. And then there’s the strong likelihood that Bitcoin will recover. Easy to forget now, but it lost more than 40% of its value in two weeks last year, and gained it all back in less than six months. Has Bitcoin been overhyped? Sure. It’s a long way from being the future of digital money. But it’s also holding up better than Dogecoin, which has fallen 87% from its peak a year ago, or Shiba Inu coin, which is down 85%. Once the smoke clears on this crazy crypto market, there will still be a global fintech revolution taking shape, and cryptocurrency and blockchain will be an important part of that. Bitcoin is the poster child.”

Sure, but why couldn’t Bitcoin fall a lot further? As dramatic as the drop has been, wasn’t it at these levels less than a year ago?

JON:

“On the other hand, Bitcoin probably hits 20K before the end of the summer.

Maybe before the end of the week. You’ve got to stop thinking of this thing like a stock. It’s not. It’s not a store of value, it’s not a hedge against inflation, it’s not a play on the genius of blockchain technology. Bitcoin was born in 2009, the purest manifestation of the market excess that grew out of the financial crisis. It’s metaverse money. It’s a currency nobody really needs, created by an inventor nobody knows. Bitcoin grew too fat on liquidity reinventing liquidity, in a decade when Uber was going to reinvent transportation and WeWork was going to reinvent offices. We believed in Bitcoin because it kept going up, then it kept going up because we believed in it. But you know what we want now? Money that can stand still for just a minute. People are talking about how Bitcoin bounces back as if there’s some long history. The first time it tanked big in 2013, it took three years to recover. It tanked in 2017 and again took three years to recover. I’m not saying Bitcoin’s worthless. But today, like a lot of risk assets, it’s obviously worth … less.”

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*Why LinkedIn? On the Other Hand is about civil debate that illuminates the relevant facts. We’ve found that LinkedIn does a good job fostering that kind of environment.

On the Other Hand is Jon Fortt’s weekly segment on Squawk Box, Thursdays in the 7 a.m. ET hour. He’s been writing it just about every week since August 2020. The second (or first) argument each week isn’t necessarily the one Jon agrees with. He just makes an honest effort to construct the best argument he can for each side.

When he’s not debating himself, Jon co-anchors Overtime at 4 p.m. alongside Morgan Brennan. Jon also researches and writes the weekly Working Lunch segment on Power Lunch, Fridays in the 2 p.m. ET hour, where he introduces viewers to founders and CEOs through their origin stories and strategic goals.