Bitcoin‘s struggle to break free from its current price barriers is turning out to be detrimental for the top cryptocurrency’s future outlook. Speaking to CNBC, Eswar Prasad, who is Senior Professor of International Trade Policy at Cornell University said,
“The promise of decentralized finance using blockchain technology is a real one but Bitcoin itself may not last that much longer.”
Noting that blockchain technology itself will be “fundamentally transformative” in finance and day to day transactions, he said,
“Bitcoin’s use of the blockchain technology is not very efficient. It uses a validation mechanism for transactions that is environmentally destructive that doesn’t scale up very well.”
He argued that newer cryptocurrency networks are using blockchain technology far more efficiently, which gives them a “fundamental value proposition.” Prasad added,
“Given that Bitcoin is not serving well as a medium of exchange, I don’t think it’s going to have any fundamental value other than whatever investor’s faith leads it to have.”
According to the economist, altcoins have even “lit a fire under central banks to start thinking about issuing digital versions of their own currencies.” They are now providing low-cost transaction mechanisms, leading to financial inclusion and stability.
Bitcoin has been in a somewhat tight spot over the past month, as it shed most of its November gains when it last reached a new all-time-high (ATH). In the previous month since then, the king coin’s price has fallen from around $58,000 to $46,000 at press time, losing about 22.6% of its valuation.
$100k a distant dream?
This setback has led to many retracting previous predictions about Bitcoin breaching $100,000 by year-end, an idea that was espoused by many such as stock-to-flow model creator PlanB and Bloomberg commodity strategist Mike McGlone among others.
In a recent interview with CNBC, Circle CEO Jeremy Allaire claimed that the likelihood of Bitcoin reaching $100,000 by the end of 2021 seemed quite unlikely.
Similarly, Jesse Powell, who is the CEO of leading crypto exchange Kraken also suggested a similar outcome recently, even adding that a crypto winter could be incoming. Back in August, the exec had anticipated Bitcoin to reach $100,000 “late this year early next year.” Reversing this previous prediction, he added,
“It’s hard to know where it goes. When you look at a long-term trendline of Bitcoin and it’s just up consistently. I always tell people, ‘If you think about buying Bitcoin, think about it as a five-year plus investment.’”