Bitcoin could quintuple in price over the next five years, according to a senior figure at a leading hedge fund.
Mark Yusko, chief investment officer of the hedge fund Morgan Creek Capital Management predicted that bitcoin would continue its current trajectory, which has already seen it rise in value by more than five-times over the last year.
“It’s just about network adoption and increased usage. This is a network and networks grow in an exponential way. This is the fastest network in history to a trillion dollars of value,” Mr Yusko told CNBC.
“What people miss is this is a technological evolution of computing power that isn’t going away. It is a powerful computing network that is going to become the base layer protocol for the internet of value.”
The price prediction is actually relatively conservative compared to other market analysts, with a panel of experts recently anticipating that bitcoin will reach above $360,000 by 2025.
This figure was the average from the predictions of 35 academics and crypto industry figures, assembled by finance comparison site finder.com last month.
“The only question that needs asking in terms of longer term valuation is whether you think bitcoin will be around in 2025,” said Joel Kruger, a cryptocurrency strategist at LMAX Group.
“If the answer is ‘yes’, the economics support a much higher valuation. It’s as simple as that.”
So-called bitcoin maximalists even believe the asset could potentially rise to as high as $1 million in the long term, as its inbuilt scarcity will result in people hoarding it like gold.
One of the best models for predicting bitcoin’s price in recent years has been the stock-to-flow ratio, which takes into account bitcoin’s finite supply and the diminishing returns from mining.
The creator of bitcoin’s stock-to-flow model, the pseudonymous analyst PlanB, has bitcoin heading on a similar trajectory to those touted by maximalists, but acknowledges that a number of outside factors can cause variations from the model.
“We want ‘all models to be broken’ and $100k bitcoin now,” he tweeted on Tuesday. “Patience is a virtue.”
Bitcoin has stalled between $50,000 and $60,000 in recent weeks, despite other cryptocurrencies like dogecoin and ethereum growing substantially in value over that same time.
“While bitcoin remains bullish, any stark price appreciation in a short period of time can neither be sustainable nor healthy,” said Sarah Bergstrand, chief operating officer of cryptocurrency investment platform BitBull Capital.
“Bitcoin can go high, but it needs time and stops along the way to reach a major milestone.”