Tag Archives: wealth

Bitcoin Price Can Climb Far Above $13,000

Bitcoin Price Can Climb Far Above $13,000: Factors & Trends

Clif High’s estimation that three ounces of gold would be equal to a Bitcoin in price by this time next year remains a bizarre proposition that is not impossible to achieve.

In a way, a predicted Bitcoin price rise from a meager $1180 to more than $13,000 seems attractive and the technicality of how that would be the case defies common understanding of the law of demand and supply. It could be a repeat of the 1979/1980 scenario.

This link to a historical event particularly fits in with the fact that High’s data sets have been proven accurate in other instances and his latest estimate show that Bitcoin price would be hinged on the rising price of gold – from $1206 today to about $4,800 by March next year, about a 300 percent increase.

Working it out

Between 1978 and 1979, the price of gold recorded more than 120 percent growth from $207 to $455, the highest in its history, due to high inflation because of strong oil prices, Soviet intervention in Afghanistan and the impact of the Iranian revolution, which prompted investors to move into the metal.

By January 1980, gold hits record high at $850 per ounce though for a while as investors seek safe haven – that’s a 310 percent increase between 1978 and January 1980.

Figuring out the total amount of gold that has ever been produced is hard. However, going by rough estimates, there are approximately six bln ounces of gold available – that is 375 ounces of gold to one Bitcoin in terms of production if we are to go by the fact that about 16 mln Bitcoins have been mined so far.

Its production rate does not necessarily translate to a higher price for either even though the number of ounces to be extracted later are unknown and it is certain that there could only be a finite 4.8 mln Bitcoins more to be mined in the next 123 years according to its whitepaper.

Other strengthening factors

One Bitcoin would be harder to get than an ounce of gold even as interest in the pricing arrangement of both commodities is increasing. Though they both show the potential to become more valuable with time, the catch-up Bitcoin played recently has cast doubt on the outlook for gold as the future’s main store of value. More so, until last year, the price of gold slide for the previous three years.

Somehow, the argument that either gold is overpriced or Bitcoin is undervalued is already adding a twist to the discussion. Different opinions are being formed as the common knowledge that Bitcoin’s value has been growing as well as the understanding of its usefulness has been improving among more people from various sectors.

Coupled with its thinning supply which has been influencing its price and the fact that it could be considered advantageous over gold in several ways including cutting out shady bank practices – though its reliance on electricity and the Internet is still a key argument that has been made against it, a sudden surge could not be overruled.

More of the growing millennials who choose to look in its direction are finding Bitcoin handy and easier to relate with more than gold despite its intrinsic value, its tangibility and its record centuries of existence.

Bitcoin is decentralized, easily moved, harder to counterfeit and gets increasingly difficult to mine over time. These basic features which have been spreading more, stand to favor Bitcoin even to make its price climb far above High’s estimate of $13,000 and its market cap correlatively increase to as much as $40 bln or more in a 12-month period.

Millionaires will be made.

Come join us as we build to make millionaires in this revolution. Check the calendar for weekly webinars. Join me in The Coin Club. It cost you nothing. You are only depositing your Bitcoin, (to withdraw later), watching the system grow your coin and the commissions you also receive when others deposit into the system below you. Pretty cool.

https://office.tradecoinclub.com/register/infinitycoin

Thomas Prendergast
Founder and CEO
Markethive Inc.

Yale Lecturer: Bitcoin is No Bubble, Long-Term Outlook is Bright

Yale Lecturer: Bitcoin is No Bubble, Long-Term Outlook is Bright

Is bitcoin’s historic rise headed for a major fall? Vikram Mansharamani, author of “Boombustology: Spotting Financial Bubbles Before They Burst” and a lecturer at the Harvard John A. Paulson School of Engineering and Applied Sciences at Yale University, analyzed the likelihood of a new bitcoin bubble in his LinkedIn post. Using five “lenses” he has developed, he concluded that bitcoin’s long-term outlook is positive.

Mansharamani noted behavioral and informational issues distort price at any point in time, but such distortions tend to disappear since supply and demand markets are basically efficient.

This might not always be the case, he observed. Higher prices could actually increase demand, according to George Soros’ Theory of Reflexivity. Soros holds that prices can trend away from equilibrium, creating booms and busts.

Higher Price Raising Demand?

At present it is not clear if a higher bitcoin price has brought more demand, Mansharamani observed. On one hand, rising interest tends to drive up prices. At the same time, bitcoin trade volume has not increased with prices. While trade volume is not a good demand indicator, it does reflect activity. Lense 1: half a point.

Another bubble sign is the presence of leverage pushing higher prices. It is not clear if bitcoin prices are bubbly. There is no sign of leverage driving prices. There are no futures contracts enabling large exposure with little collateral or options providing de factor leverage.

The amount of debt supporting fiat currencies is an indicator. Traditional currencies are getting debased worldwide. Cryptocurrency offers a non-printable currency like gold. Lense 2: zero.

Psychological Factors

Psychology is another factor. When people assume the belief that “it’s different this time,” it’s time for buyers to beware. Asset prices never increase indefinitely. Bitcoin is no different in this regard.

Agreement exists that cryptocurrencies are in vogue and offer freedom from authoritarian manipulation. Mansharamani noted Peter Thiel has acknowledged that PayPal did not create a new currency, but a new payment system, whereas bitcoin has provided a new currency.

Bitcoin has its dedicated advocates. Internet analyst Henry Blodget and CNBC commentator Brian Kelly have delivered highly optimistic forecasts for bitcoin’s value. Lense 3: check.

Political Considerations

Politics is yet another consideration, including both moral hazards and regulations. Regulations can distort prices of any asset by artificially raising or undermining supply or demand.

As an example, political considerations delivered regulations that encouraged people in the U.S. to buy houses. Buyers had Fannie Mae or Freddie Mac to fall back on.

Bu there are no artificial government interventions supporting bitcoin prices. Regulators, for their part, are trying to discourage bitcoin. Governments, however, can’t do much more than temporarily impact the price of bitcoin, as was the case when China recently tried to control bitcoin trading.

There are no signs of moral hazards surrounding bitcoin. The people who lost millions when Mt. Gox filed for bankruptcy did not get bailed out. Bitcoin market players are buying with open eyes and are aware of the risks. Lense 4: zero.

Bitcoin Not Yet Widely Held

In comparing investment hysteria to a spreading fever, the variables of concern include the infection rate, the removal rate and importantly, the portion of the population not yet affected. The last metric can be seen as the fuel available to keep the fever spreading. Once it runs out of victims, the fever’s over. New demand disappears and prices fall.

The number of potential bitcoin buyers is big. The market capitalization at $20 billion is minuscule compared to its potential. A recent Twitter poll found that 49% plan to buy bitcoin while 22% said they were “max long” on bitcoin or “curious.” Bitcoin is not as widely held as it could be. Lense 5: zero.

In reviewing all five factors above, Mansharamani said the likelihood of bitcoin being a certain bubble only registers 1.5 out of 5 possible points. The stage could be set for it to become a bubble, but it is not yet there.

Short-term price corrections are always possible, but the long-term outlook for blockchain enabled currencies is positive.

Millionaires will be made. Come join us as we build to make millionaires in this revolution. Check the calendar for weekly webinars. Join me in The Coin Club. It cost you nothing. You are only depositing Bitcoin, watching the system grow your coin and the commissions you also receive when others deposit into the system below you. Pretty cool.

https://office.tradecoinclub.com/register/infinitycoin

 

Thomas Prendergast
Founder and CEO
Markethive Inc.