Despite the challenges facing the cryptocurrency industry, the venture capitalist, who has consistently gambled on the ascent of bitcoin, is optimistic. Individual investors fled the bitcoin industry after its collapse in 2022. In an effort to make a quick buck, the latter had rushed the sector a year earlier during the crypto mania. But all of these expectations have been dashed by the decline in price of the majority of cryptocurrencies and countless scandals.
From its all-time high of almost $3 trillion hit in November 2021, the cryptocurrency market has lost over $2.1 trillion. With this decline, investors have witnessed the value of their investments evaporating. Some lone investors have seen practically all of their savings disappear.
According to research firm CoinGecko, Bitcoin (BTC), the most valuable cryptocurrency in the world, has decreased from an all-time high of $69,044.77 recorded on November 10, 2021 to a current price of $16,746.62. BTC advocates projected that the cryptocurrency will reach $100,000 before the end of 2021 when a large number of ordinary investors began to get into the crypto mania towards the end of 2021.
FOMO
Many retail investors were seduced by these alluring forecasts and succumbed to FOMO, or fear of missing out. The term “FOMO” in the crypto world refers to the fear of missing out on a chance to make money. Amateur investors have been scared off by the market downturn, while BTC and cryptocurrency fanatics are still holding onto their beliefs despite suffering losses. Tim Draper, a millionaire venture capitalist, is the subject of this case. By the end of 2022, he anticipated, bitcoin would reach a value of $250,000.
That forecast for 2023 was just restated by him in an email to CNBC. This implies that the price of bitcoin will increase by 1,400% from its current level.
Given just one in seven bitcoin wallets are now held by women, Draper told the news source, “my opinion is that the dam is going to break since women control 80% of retail spending.” Draper thinks that the ascent of cryptocurrencies can be restarted because of some favorable reasons. The founder of Draper Fisher Jurvetson told CNBC, “I think the half-year in 2024 will have a positive run.” The Bitcoin protocol’s fundamental occurrence, the halving, occurs about every four years. The reward provided to bitcoin miners that add new blocks to the blockchain will be cut in half.
A number of regulations are written into the Bitcoin protocol’s code and cannot be broken. The first of these is the upper limit on the total supply of bitcoins, which will never exceed 21 million. This idea of scarcity is what gives bitcoin its value.
The first block reward on the Bitcoin network was 50 BTC. However, a particular protocol provision, another unbreakable rule, gradually lowers this payout over time. It is called the halving.
UNCERTAINTY
The reward for maintaining the Bitcoin network is therefore cut in half every 210,000 blocks. Therefore, the halving serves two purposes: it restricts the number of new bitcoins that can enter circulation on the network and maintains the blockchain’s long-term viability. Since a new block is often formed every ten minutes on average, the halving typically has a four-year length. Since the reward halving is pre-programmed into the cryptocurrency asset’s source code, it doesn’t require any action on the part of the user to take place. The main issue with Draper’s statement is that the bitcoin business is now surrounded by a great deal of uncertainty.
