Projecting The Price Of Bitcoin

I've taken the liberty of preparing a projection of bitcoin's price action going forward:


You see the primary dynamic is continued skepticism from the mainstream, which owns essentially no cryptocurrency and conventionally views bitcoin and its peers as fads, scams and bubbles that will soon pop as price crashes back to near-zero.

Skepticism is always a wise default position to start one's inquiry, but if no knowledge is being acquired, skepticism quickly morphs into stubborn ignorance.

Bitcoin et al. are not the equivalent of Beanie Babies. Cryptocurrencies have utility value. They facilitate international payments for goods and services.

The primary cryptocurrencies are not a scam. Advertising a flawless Beanie Baby and shipping a defective Beanie Baby is a scam. Advertising a mortgage-backed security as low-risk and delivering a guaranteed-to-default stew of toxic mortgages is a scam.

The primary cryptocurrencies (bitcoin, Ethereum and Dash) have transparent rules for emitting currency. The core characteristic of a scam is the asymmetry between what the seller knows (the product is garbage) and what the buyer knows (garsh, this mortgage-backed security is low-risk--look at the rating).

Both buyers and sellers of primary cryptocurrencies are in a WYSIWYG market: what you see is what you get. While a Beanie Baby scam might use cryptocurrencies as a means of exchange, this doesn't make primary cryptocurrencies a scam, any more than using dollars to transact a scam makes the dollar itself a scam.

Bubbles occur when everyone and their sister is trading/buying into a "hot" market. Bubbles pop when the pool of greater fools willing and able to pay nose-bleed valuations runs dry. In other words, when everyone with the desire and means to buy in and has already bought in, there's nobody left to buy in at a higher price (except for central banks, of course).

At that point, normal selling quickly pushes prices off the cliff as there is no longer a bid from buyers, only frantic sellers trying to cash in their winnings at the gambling hall.

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Disclosures: None.

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Comments

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Black Widow 3 years ago Member's comment

What makes one #CrypoCurrency better than another? I'm familiar with #bitcoin, but not the others. $BCOMP $BCOIN

Adarsh Patel 3 years ago Contributor's comment

It's not that there is necessarily one that is better, but there is a huge differentiation between the success of some over others. Many cryptocurrencies are very unstable and can cause serious gains and losses for investors whereas some are somewhat more stable: bitcoin, ether, litecoin. If you have any more questions feel free to personally message me!

Adarsh Patel 3 years ago Contributor's comment

One of the most honest and clear analyses of crypto-assets! I would love to hear your opinion on the addition of SegWit in LiteCoin and other such cryptocurrencies! Where do you suspect the value of LiteCoin to be in 2020, 2025, etc?

BreakingBad News 3 years ago Member's comment

I agree, great article.