Recently Tim Draper announced that he sees Bitcoin hitting $250k by 2022, a huge prediction by any means.
To put that into perspective, from the current price at the time of posting this $8,900 USD, that would mean Bitcoin would have to increase $241,100 USD in a bit over four years. That is a gain of $60,275 USD per year.
It's hard to dispute that Tim has a great track record when it comes to investing in the next big thing, he has led investments in Skype, Tesla, Twitter, and SpaceX and purchased $30,000 worth of Bitcoin from the U.S. government in 2014.
Given Bitcoin (and cryptocurrencies in general) had a turbulent start to 2018 after Bitcoin reached an all-time high of $20,000 USD in 2017, regulations around cryptocurrency are still in their infancy, volatility and serious scaling issues that have plagued Bitcoin and other currencies like Ethereum.
What would it take for Bitcoin to hit $250k?
Reduced supply and increased demand is one of the core catalysts for a price rise. As more people come into Bitcoin and supply is reduced (ie. nobody is selling), the price will rise to meet the demand, this is economics 101: supply and demand.
But the supply and demand approach only works if people don't sell. If a large holder of Bitcoin were to flood the market by dumping them, the supply would increase and when your supply exceeds demand, the price goes down. Unlike fiat currencies as witnessed in Venezeuala, 21 million Bitcoins is the hard limit, so more cannot be printed, but there are a few million in unaccounted Bitcoin.
There is a risk that "lost" Bitcoins could enter the main supply. Satoshi Nakamoto's wallet has around 1 million Bitcoin which accounts for roughly 5.9% of the total supply. Nobody knows who Satoshi is (he, she or they), and they haven't touched their coins (possibly out of fear of being identified).
These coins that Satoshi still has might well be lost, or Satoshi might have a time-lock mechanism waiting until the right time before the coins are claimed and cashed out or used, this would affect the price because the current price is based on the fact Satoshi still has their coins (reduced supply).
But then you have those who lost their access keys, died, threw out their hard drives and computers like James Howells from Newport, Wales who accidentally threw out a drive accidentally containing $100 million worth of Bitcoin.
James has been petitioning the council for the right to dig for the lost Bitcoins, but so far has been told no. If James were to ever get permission and find his Bitcoin, the supply would be increased and such a large amount would have an impact on the price.
In 2017, research from Chainalysis studied the blockchain and based on a high estimate concluded that 3.79 million Bitcoins are gone for good and 2.78 million based on a low estimate. This ranges from 17-23% of the current supply of mined Bitcoins being lost.
As the years pass and technology gets better, new techniques will emerge allowing people who lost Bitcoins to get them back. This means we cannot truly say that the currently lost Bitcoins will forever remain lost.
In the mean time, there are other risk likely to affect the price such as forks and scaling issues.
For Bitcoin to reach $250k by 2022, the scaling issue would need to be completely solved and efforts like Lightning Network have already shown that it can be solved. And then the regulatory hurdles and uncertainties surrounding Bitcoin and cryptocurrency would need to be solved as well.
Once you solve the scaling and regulation problems, cryptocurrency needs to go mainstream for the price to truly skyrocket. If you're already invested in cryptocurrency, it can be hard to forget outside of your bubble many people do not understand cryptocurrency nor how to "get into it", but as platforms like Coinbase continue to make it easier to buy Bitcoin, adoption will increase.
The real question is, will McAfee stick by his bet of eating his own dick if Bitcoin doesn't hit his prediction of $1 million by the end of 2020? Someone made a website tracking McAfee's prediction and so far, he is doing okay.