The Bitcoin game rages on. And so does its price volatility, which can rise and fall by 1000 points in a matter of days.
That’s good for Bitcoin traders, provided that they are smart and lucky enough to buy and sell at the right time.
But for investors, Bitcoin price volatility is just “noise” which makes it hard to see the position the digital currency will be in, let’s say, years from now.
To figure that out, my student Greg Giordano and I have been doing some econometric work lately. Greg ran two econometric models, the Haye’s model and the Wheatley models—see table 3. On the one side, the Haye’s model predicts a price of $55,931.60.
That’s a very bullish forecast. For a good reason: it focuses on the supply side of the Bitcoin market, which is expected to grow at an ever-slower pace, as it gets closer to the limit.
On the other side, the Wheatley model predicts a price of $2352.03. That’s a very bearish forecast — for a good reason, too. The model focuses on the Bitcoin use, that is, on the demand side of the Bitcoin market. And Bitcoin demand has been growing slowly, as evidenced by a recent Gallup survey.
**As of 8/3/18, at 9.30 pm
[Ed. note: Investing in cryptocoins or tokens is highly speculative and the market is largely unregulated. Anyone considering it should be prepared to lose their entire investment. Disclosure: I don’t own any Bitcoin, Greg Giordano owns Bitcoin.]
Number of Cryptocurrencies That Advanced/Declined In The Top 100 Ranks
Source: Coinmarketcap.com 8/3/18 at 9:30 a.m.
Two Forecasts For Bitcoin’s Price In 2020
|Forecasting Model||2020 Price||Notes|
Bitcoin mining difficulty will increase at 7% monthly rate (last two years the rate was 14% monthly)
|Wheatley||$2,352.03||Transactions/day will follow same pattern of monthly rate increase at 2%|
“ Wheatley’s model is known to value bitcoin at a much lower number,” explains Greg. “Their paper is known to state bitcoin’s total market cap at around $20 billion when the actual number is over $130 billion. Therefore Wheatley’s estimation is one that points to bitcoin’s intrinsic as much lower than all other estimates I have seen. MIT did a comprehensive review on Wheatley’s. However, I believe there is still value to be found in Wheatley’s estimation.”
But not that much value will be left to investors who buy at these prices, if the prediction of the model comes true.
Still, some Bitcoin experts subscribe to a bullish scenario for Bitcoin over the long-term. Steven Russo, Executive Vice President of Kripti, is one of them. ” Bitcoin is unquestionably still in its’ infancy and requires additional time for it to mature. It is going to happen, and there is still money to be made for those that have the heart, the stomach, and patience. It is not unreasonable to think that returns could be 3x to 5x over the next five years.”