For nearly the entirety of 2018, the cryptocurrency space has experienced the doldrums of a bear market and Bitcoin has failed to sustain a price above $10,000 (as of writing this, Bitcoin is stuck in the $6k/$7k range). Numerous investors, especially newer entrants, are starting to capitulate and lose interest in the market. Detractors are louder than ever, notably including Warren Buffet who called Bitcoin “rat poison squared”.
For many, the onslaught seems like it has no end and shortsightedness has become apparent. Even with diminishing public sentiment and a large contingency that thinks Bitcoin’s future is bleak, I believe Bitcoin will hit $100,000 by 2021:
The next Bitcoin halving (or halvening) will occur in May 2020, which will reduce the current mining block rewards by half. This event is significant since the amount of Bitcoin mined after each ten minute block will drop from 12.5 Bitcoins to 6.25 Bitcoins. After the halvings of 2012 and 2016, a considerable appreciation in Bitcoin’s price was reflected within the year. It’s also likely that speculators may temporarily provide a spike in anticipation of the next halving as it is approached. With less Bitcoin being distributed into the circulating supply and increased demand, the halving may serve as a distinguished price catalyst.
At the height of the dotcom bubble, the NASDAQ was worth nearly $7 trillion. I must emphasize, the dotcom bubble was only confined to the United States! In contrast, the cryptocurrency market is global, so it has the potential to far eclipse the trillions witnessed during the dotcom boom. Currently, the entire crypto market is less than $300 billion, with Bitcoin accounting for about 45% of this sum. Bitcoin’s size pales in comparison to other markets, which may help to put it’s growth potential into perspective:
January 2018 U.S. Stock Market Peak = $30 Trillion
Implied Market Cap of Gold = $7.8 Trillion
Value of Dotcom Bubble Peak = $6.71 Trillion
Daily Volume in Forex Market = $5.1 Trillion
Bitcoin’s Market Cap = $125 Billion
Furthermore, each of the top 10 companies in the US stock market, on their own, have greater market caps than all of crypto. The likes of Apple and Amazon are on the cusp of reaching $1 trillion valuations. Will anybody want to buy Bitcoin at $100k? Admittedly, Bitcoin has less stable growth, but Berkshire Hathaway’s class A shares have had prices above $300k, so the price alone shouldn’t be a deterrent.
By the end of 2021, the supply of Bitcoin will be around 18.7 million, meaning that the market cap of Bitcoin would need to be approximately $1.87 trillion to achieve $100k. Taking the aforementioned numbers into consideration, it’s conceivable that such a price point can be reached by 2021. Until then I will just keep investing with Cryptoinvest.
It’s estimated that nearly 4 million Bitcoins are lost forever, many during the early days of Bitcoin’s history. This is a sizable figure considering that the current circulating supply is just north of 17 million and the final supply of Bitcoin will be 21 million.
Another aspect that is highly underestimated is the conviction of Bitcoin’s holders. Typically referred to as Hodl’ers, they are likely to hold their Bitcoin through the dramatic and often chaotic swings of the market. Bitcoin is not just mere speculation, it’s a movement. There’s a growing number of individuals favoring the principles embodied by Bitcoin’s decentralized network instead of the established banking systems. Hodl’ers, in conjunction with Bitcoin’s missing coins, may serve as compounding effect on supply and demand, which may ultimately contribute to positive price action.
