Coinbase Investment Chief Sees Bitcoin Experiencing 'South Sea Bubble-Type Move'

Benzinga and Yahoo Finance LLC may earn commission or revenue on some items through the links below.

Bitcoin could be gearing up for a massive move up, according to Eric Peters, investment chief and CEO at Coinbase's (NASDAQ:COIN) Coinbase Asset Management unit.

Peters said in an Aug. 25 “Bankless” podcast episode that the cryptocurrency market, especially Bitcoin, had a 25% chance of experiencing a “South Sea bubble-type move” when asked how high cryptocurrency assets can actually go.

Don't Miss:

Your Last Chance to Invest in Pacaso Before Their Global Expansion — Offer Ends Sept 18 Vacancy Rates Below 5% and $2.3B in Unmet Demand — How Everyday Investors Can Access America's Industrial Boom

The South Sea Bubble refers to a significant financial collapse that occurred in the 18th century, involving British joint stock firm South Sea Company. The company had a monopoly on supplying slaves to Spanish plantations in the Americas, promising huge profits and high returns. But when the trade failed to take off it turned to fraudulently inflating its valuation to keep the ruse going and for while it worked. The growth of the company’s stock triggered a speculative frenzy that peaked in 1720. The company’s stock soared over 680% within the year before crashing over 80% as the bubble eventually burst.

Peters said that Bitcoin and the broader cryptocurrency market could experience a similar rally as barriers to entry for big institutions disappear and passive flows increase due to the limited supply.

Trending: An EA Co-Founder Shapes This VC Backed Marketplace—Now You Can Invest in Gaming's Next Big Platform

“Everything else that humans have ever invested in, if the price goes up, you create more of it,” he said. “You don’t create more Bitcoin. I mean, you’re creating a little bit, but there’s no big supply response. The rate of mining creation is not going up because the price doubles or triples or quadruples. It just doesn’t go up. You have to just get people who currently own it to sell it at a higher price. So, you could see some type of massive move.”

Beyond the potential of a South Sea Bubble-type run-up, Peters also said that he believed there was another 25% probability that Bitcoin would swing wildly between $50,000, $75,000 and $250,000 over the next five years. And beyond this, he said that there was perhaps another 25% possibility that Bitcoin would trade even lower over the next five years.

“I don’t know,” he said. “It would probably be [sic] hostile administration. Some things really went wrong that I can’t foresee right now.”

Story Continues

See Also: Kevin O'Leary Says Real Estate's Been a Smart Bet for 200 Years — This Platform Lets Anyone Tap Into It

Still, Peters broadly expressed optimism about Bitcoin becoming “a dominant store of value” that could overtake gold.

Meanwhile, speaking about Ethereum, Peters said he saw ETH as “more of a trade” because he believed that a higher ETH valuation would make transacting on the network difficult, which would in turn lead to scaling innovations that could limit the impact of network effects on price.

“It could be more subject to boom-bust,” he said.

Peters’ remarks come as the cryptocurrency market has experienced a resurgence over the past year. The resurgence has been driven by institutional interest as the digital gold and tokenization narratives gain ground on Wall Street. It has also helped that the Trump administration has significantly thrown its weight behind the cryptocurrency industry.

Peters suggested that the recent resurgence still had upside potential as he stated that institutions had yet to enter with size.

Read Next: Bill Gates Invests Billions in Green Tech — This Tree-Free Material Could Be the Next Big Breakthrough

Image: Imagn Images

This article Coinbase Investment Chief Sees Bitcoin Experiencing 'South Sea Bubble-Type Move' originally appeared on Benzinga.com

View Comments