Bitcoin (BTC), the world's leading cryptocurrency by market value, has fallen from an all-time high of $69,044.77 reached on November 10, 2021 to $16,746.62 today, according to a data firm. CoinGecko . When many individual investors jumped on the cryptocurrency craze in late 2021, BTC evangelists predicted that the cryptocurrency was on track to hit $100,000 before the end of 2021.
FOMO
Lured by these tantalizing predictions, many retail investors gave in to FOMO, which stands for Fear of Missing Out. FOMO is a crypto acronym generally used for the anxiety of missing out on an opportunity to make money.
While the market crash has chilled amateur investors, BTC and crypto evangelists have not lost faith even when their fingers were burned. This is the case with billionaire venture capitalist Tim Draper. He predicted that Bitcoin would hit $250,000 by the end of 2022.
He simply reiterated that 2023 prediction in an email to CNBC. Given the current price of bitcoin, this means that the digital currency will skyrocket by 1400%.
"My guess is that since women control 80% of retail spending, and only 1 in 7 bitcoin wallets are owned by women, the dam is about to burst," Draper told the news outlet.
Draper believes that there are positive factors to restart the cryptocurrency boom.
โI suspect that the 2024 halving will have a positive outcome,โ Draper Fisher Jurvetson founder told CNBC.
The halving is an essential phenomenon of the Bitcoin protocol that takes place approximately every four years. It consists of halving the reward given to bitcoin miners who register new blocks in the block chain .
The Bitcoin protocol contains a series of rules written into its code and that cannot be violated. The first of these is the limitation of the number of bitcoins: there will never be more than 21 million bitcoins in circulation. It is this notion of scarcity that makes bitcoin's value.
Originally, the initial block reward of the Bitcoin network was 50 BTC. But a special clause in the protocol, another rule that cannot be transgressed, reduces this reward over the years: it is the halving.
Uncertainty
Every 210,000 blocks, the miners' reward for maintaining the Bitcoin network is halved. Thus, the halving serves a dual purpose: it limits the number of new bitcoins in circulation on the network and allows the longevity of the blockchain to continue.
Since a new block is created approximately every ten minutes on average, the halving generally corresponds to a duration of four years. There is nothing you do to make the halving happen, as it is written in the source code of the crypto asset: the rewards are halved automatically when it happens.
The big problem with Draper's prediction is that there is a lot of uncertainty surrounding the cryptocurrency industry right now. We still don't know all the collateral victims of the bankruptcy of the empire of Sam Bankman-Fried, the disgraced former king of cryptocurrencies.
The Bankman-Fried crypto empire imploded in a matter of days on November 11 after being at the center of the crypto industry. This empire was made up of the cryptocurrency exchange FTX and its sister company Alameda Research, a hedge fund which also served as a trading platform for institutional investors.
Regulators are trying to piece together what happened, and especially how FTX, which was valued at $32 billion in February, could implode overnight.
