This post is not investment advice.
Previously I predicted the high Bitcoin price of $18,000. I was off by a bit but very close. This was the prediction of the high price. I also predicted the current downturn and low floor price of $6000. I do these predictions for fun and nothing I say should be taken as investment advice. 4 months back I proclaimed that Bitcoin is in a bubble. Today I claim Bitcoin is finally at it's true price of around $8000 with it's floor at around $6000.
I do not see Bitcoin going much lower from here and I still see Ethereum rising to $10,000+ this year. This means unless there are some unforeseen regulatory tragedies there will be trillions of dollars which will flow into crypto this year. Currently regulatory uncertainty in my opinion is the only thing slowing down the current pace of growth. This regulatory uncertainty in some cases seems deliberate as the IRS keeps the tax situation confusing even for accountants and then of course there is FINCEN, SEC, etc, and this is just in the United States. In Asia there is also regulatory uncertainty with the ICO bans, the threat in South Korea to raise taxes (capital gains), etc.
In my opinion capital gains taxes on crypto trading slows growth and serves no other purpose or function. It does raise money in the short term but at the cost of the long term. Which is to say it discourages trading perhaps so much that less tax money is received overall than what could have been received. The issue of people not being willing to pay their taxes in my opinion is a matter of ignorance. People believe if they ignore the tax authorities that somehow it will go away but the truth is that for people who want to pay our taxes there isn't an easy smooth process to do so. Capital gains only adds cost to accounting and complicates the situation (I experience this first hand).
Bitcoin and Ethereum each in my opinion will achieve trillion dollar market caps at some point in their lifetime. I predict Ethereum will reach this achievement first due to the fact that Ethereum developers are working on scalability and on improving it's use cases. It is true that arguments can be made to show that Ethereum has issues with smart contract security but I do not think these arguments will prevent money from flowing toward ETH. I do think for ICOs and projects on top of ETH it is going to be very difficult to guarantee security under the Ethereum architecture even if scalability problems can be solved this year.
My price predictions for this year:
Up to 3 trillion dollar global market cap for all crypto.
$10,000+ ETH.
Increased clarity in regulation.
For all who want to see these predictions happen faster the suggestions below may be counterintuitive but I believe them to be appropriate.
- Support regulation of the crypto markets. These regulations should be sensible and effective for reducing risks. These regulations should do no harm and also promote long term sustainable growth.
- Support regulated ICOs in particular. Too much bad press and money lost in scams will not attract more money to crypto. Promote the idea of regulating certain kinds of ICOs which involve securities and leaving other kinds of ICOs unregulated by the SEC but instead use technological means. When technological means are not available then use traditional institutions like the SEC.
- Support projects which seek to improve scalability.
- Support all projects which add utility and allow participants to earn crypto rather than buy.
When we have clarity in regulation the uncertainty goes down. This will in my opinion attract trillions of dollars to this space. Tax clarity will attract actual usage of crypto. Scalability will enable the infrastructure to support the increased usage. Higher prices for BTC and ETH will be the result and it will not take as long as people might think for this to happen.