In a world with predictable inflation for the US dollar, Bitcoin is the only suitable instrument for making assets future-proof. The Winklevoss brothers believe this and are certain: Bitcoin will replace gold as a store of value and has the potential to rise in value to 500,000 US dollars and more.
500,000 US dollars per Bitcoin (BTC)? This admittedly sounds like clickbaiting – but in this case it is the Winklevoss Brothers who put it as a headline for an analysis of the future of Bitcoin. Cameron and Tyler Winklevoss are known beyond the U.S. as ex-colleagues of Facebook boss Mark Zuckerberg, with whom they litigated about idea theft for the social network. The Winklevoss brothers have been a household name in the crypto scene since 2013, when they discovered Bitcoin for themselves and, as pioneers, wanted to set up an ETF based on BTC. The Winklevoss brothers have thus presented a paper in which they show how and why Bitcoin could rise in price to the starry sky.
BTC at 500,000 US dollars? Arguments of the Winklevoss Brothers
The detailed report on the prospects for Bitcoin is worth reading because the Winklevoss brothers strike an entertaining balance between economic evidence and rhetorical exaggeration. The starting point is the U.S. state budget: even before the beginning of the Corona crisis, the U.S. government had “spent money like a drunken sailor, cut taxes like Crazy Eddy and printed money like a banana republic,” according to the authors. This means that monetary policy has probably departed forever from the goal of saving surpluses in the national budget in good times for reactions in crises. In the pleasant scenario, therefore, sooner or later noticeable inflation will occur, in the dystopian case even hyperinflation. The national debt of the USA is constantly reaching new all-time highs and a turnaround is no longer feasible, write the twin brothers who have studied and list sober figures.
The crisis with Covid-19 confirms the trend, the argumentation is continued. In such an environment, capital flees to so-called “safe havens”. But oil as an option is no longer suitable for this, because demand is falling as production capacities increase. Situation like negative crude oil prices in April 2020 are likely to repeat themselves, so oil is no longer a store of value. Things look a little better with gold. There, expensive storage and transport are causing problems. In addition, there are plans to search for gold in space and thus the risk of pulverizing the total quantity of gold, which has been considered limited so far, as a pro-argument in the medium term.
So what is left for citizens and especially the younger generation who want to build up savings and protect them against inflation? They will rely on Bitcoin, the Winklevoss brothers believe. Bitcoin is the Internet currency par excellence and has already written a success story in the good ten years since its launch. What speaks in favor of BTC is its limitation to the maximum amount of 21 million, its independence from monetary policy and central banks, and its physically unlimited global usability.
With this, the avowed Bitcoin fans Winklevoss have set the stage for their account: At current prices, around 9 trillion US dollars are stored in gold, and around 200 billion US dollars in Bitcoin. When the capital switches from gold to BTC, the magic number of 500,000 US dollars per Bitcoin results. But that is not the end of the story: Large companies like MicroStrategy are already beginning to shift reserves to BTC. Central banks could also start to withdraw part of their reserves from foreign currencies and deposit them in Bitcoin. In that case, even with 600,000 US dollars for BTC, the last word has not yet been spoken, the two Winklevoss predict.
Conclusion: BTC price prediction by the Winklevoss – reverie or real chance?
Bitcoin is often compared with gold, and the Bayerische Landesbank, for example, uses this method to arrive at a medium-term price target of 90,000 US dollars. The Winklevoss brothers do not name a clear target date for their forecast. They only refer to how quickly cell phones have replaced the classic devices – in less than three decades. Anyone like them who assumes that central banks and monetary policy will not find a way out of the debt and inflation trap already has a weighty argument in favor of Bitcoin. The switch from gold to BTC is then the second step. Nevertheless already pertinent optimism belongs to it to fade out risks with Bitcoin like quantum computers or the emergence of new, technologically superior crypto currencies. Positively adjusted investors will love the thought play of the Winklevoss brothers – realists will file it away benevolently as one estimate among many.
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