The co-founder of institutional digital asset manager Morgan Creek Digital says his prediction that Bitcoin will hit $100,000 in the next 2.5 years is conservative.
In a new interview with CNN, Anthony Pompliano says the effects of the Federal Reserve’s decision to cut interest rates for the first time in more than a decade will likely be felt right around Bitcoin’s next halving in May of 2020.
“Whenever we get to recessive periods or slowing growth, central banks have two tools. They can cut interest rates, which they just did yesterday and they can print money, quantitative easing. And when they do both of those things, it usually takes six to 18 to actually feel the effect of those tools. And what it’s going to do is coincide with the Bitcoin halving, which we can get into what that is. And so we think that cutting rates, printing more money and the systematic structure of Bitcoin is going to lead to higher prices for Bitcoin over a long period of time.”
Pompliano says he believes Bitcoin’s fixed supply will be the foundation for the leading cryptocurrency’s growth in the coming years.
“The code was created and there’s 21 million that are going to be distributed over time. An easy way to think about it is every 10 minutes, 50 Bitcoin were given out in the beginning to people who were running the software, the miners. That went on for four years and then after four years, that reward got cut in half. So it went from 50 to 25. Four years later it got cut in half again to 12.5. And in May of 2020 it will get cut in half again to 6.25.
When you have a deflationary asset, it has a disinflationary monetary schedule. Meaning that there’s some inflation in the beginning but it gets lower and lower over time. It’s very similar to the stock-to-flow ratio of gold. So there’s existing supply and you’re going ahead and continuing to add to it. The difference between Bitcoin and gold is with Bitcoin we know exactly how many are getting created today. The second thing is we know the total supply available, which is 21 million. So it’s not, ‘Hey, I wonder how much is in the ground.’ We can actually go in and audit or verify the software code of the system.”
As for his big prediction, Pompliano says he expects BTC’s trademark volatility and explosive growth to continue after it hit a bottom of around $3,200 in December of last year.
“In 2017, Bitcoin went up 20x. So it’s a hyper-volatile asset. We’ve seen it go up 20x, 30x, 50x at times. We’ve also seen it drawdown over 80% three times. In August we said, ‘Look, it was trading around $7,500 or $7,000 – it’s going to drop to $3,000. It ended up doing that around December of last year. And then [we said] it was going to recover back to $10,000. And it did that. And so, we think now from about $10,000 where it sits today, it’s a pretty conservative estimate to see it hit $100,000 in the next 2.5 years.”