$ 100,000 Bitcoin? Is this possible?
Recently there has been a craze with bitcoin. We saw more than a 130% price increase by late spring. Bitcoin (along with Ehtereum) gained more and more steam until it finally made it to mainstream news. The mining craze had also escalated to the point of severely disturbing the graphics market.
By this point we saw a lot of new comers joining the bandwagon. As history has shown us, many started to flock towards an investment when there’s an enormous hype around it. In my case, I started running opposite when the crowd started joining in on the action. By this point I knew it was too late for many to get in on the buying. Sure enough within 1.5 weeks bitcoin starts to tank.
Now that we have had a correction and a slight bump back in the price of bitcoin, what can we expect next? As of mid to late August there have been many articles calling for 10,000 bitcoin, 50,000, even upwards of 500,000! Just seeing these numbers make people want to instantly buy more. Many simply take note and believe what they see without actually thinking about the feasibility. If we look at the current trend on Figure 1, we can see a clear steady growth. The green and red sub-trend lines trace out a nice bull and bear cycle that closely follows the trend line.
As we pull away from the trend we quickly correct back to the trend line right above the 30 day moving average. This cycle occurs very cleanly from early May all the way into June. As soon as we began to break through the 30 day moving average we entered a bear pattern in late June. Now there have been many important update news and events that have occurred during this time that I will not get into here. There is also a lot of fear and speculation for August 1st deadline for a fork in bitcoin.
Some hope for those that got into the market relatively late is that we may certainly see a larger bull / bear market appear. Just as shown in Figure 1 for a smaller time increment. We may see the larger trend play out as shown in Figure 2. We have a nice run that quickly pulls away from the trend line. A pullback is needed and we see that have that. Note this pull back may continue on into October / November. A key area around $ 3000 needs to be broken for the green light.
For those looking to invest long what you should do is wait for the price to break that $3000 barrier. If we can break this then we will enter another bull run that very well may end up at $4000 within another year.
The trend line in Figure 1 shows a strong growth rate, and at this growth rate, although aggressive, $10,000 bitcoin is certainly possible by 2020. All one has to do is extrapolate out a few years. I highly doubt we will see anything much more than this by 2020. Others have indicated much higher but I doubt it on this time frame. That much growth in such a short period of time is not sustainable without having some serious pull back. This assumes no serious news events which can significantly impact the price. For those that have joined late in on the market, do not worry, bitcoin is certainly poised to go higher especially on the long end. Now a word of warning, no one can fully predict the future, there may be events that trigger another dip or maybe another high. Invest at your own risk!