The annual Sohn Investment Conference in New York is usually a place where Wall Street’s best hedge fund managers and investors present their top stock picks—from Amazon to Valeant Pharmaceuticals. And for the first time in the event’s 23-year history, one of those investors used the Sohn conference stage Monday to recommend a certain digital investment: Bitcoin.
John Pfeffer, a partner at his London-based family office Pfeffer Capital, is not only betting on Bitcoin, but giving it a bold price target of $700,000—about 75 times the current Bitcoin price of nearly $9,500.
While Pfeffer did not put a time frame on his prediction, his target exceeds even optimistic forecasts from other influential investors such as venture capitalist Tim Draper, who earlier this month predicted the Bitcoin price would reach $250,000 by 2022.
“Bitcoin is the first viable candidate to replace gold the world has ever seen,” Pfeffer, a former partner at private equity firm KKR, told the crowd at the Sohn Investment Conference at New York’s Lincoln Center. “So if Bitcoin becomes the dominant non-sovereign store of value, it could be the new gold, or new reserve currency.”
Pfeffer’s math works like this: First, he assumes that Bitcoin can logically replace all of the gold bullion currently held by private investors—in other words, the gold bars that people keep in a safe-deposit box or bury in their backyard, simply as a way to park their money in something more dependable than paper. (The gold bars in this example are also what’s known as a “store of value.”) “Bitcoin is vastly easier to store and secure,” Pfeffer said.
The current value of all privately held gold bullion is about $1.6 trillion, according to Pfeffer. Assuming there will be 18 million Bitcoins in circulation by the time the cryptocurrency fully replaces gold bullion (about 17 million Bitcoins have been produced so far, out of the maximum 21 million that can exist), the implied value of a Bitcoin would then be $90,000. This is Pfeffer’s most conservative scenario, which he gives 8% odds of coming to fruition.
But Pfeffer has even higher hopes for Bitcoin—that it could eventually be to central banks what traditional foreign reserve currencies are today. (From euros to Japanese yen, governments hold foreign cash to pay down international debts and complete other cross-border transactions.) “It’s imaginable that Bitcoin displaces some form of reserves over time,” Pfeffer said at the conference.