Some experts believe that there is an incredibly bright future for bitcoin, while others see particularly hard times ahead.
So, who should we believe?
It’s really anyone’s guess at the moment.
Economics Professor at Columbia University Panos Mourdoukoutas, and one of his students, turned to econometric models to forecast the price of the world’s largest cryptocurrency in 2020. The two models they used picture two, completely opposite, potential outcomes.
From the bullish perspective, the prediction was that bitcoin’s price will reach US$55,000 by the end of 2020. The bullish forecast was predicated on the supply of the cryptocurrency.
Mining of bitcoin is expected to grow at a slower pace as we are getting closer to the 21 million cap. While it’s not a match for John McAfee’s famous prediction of bitcoin reaching $500,000 by 2020, this is still a massive increase from where the currency is trading at right now.
To add to this, there is some unexpected and abnormal changes in the way bitcoin can be obtained.
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The reward for successful BTC miners will also drop from 12.5 to 6.25 per block in 2020.
What does that mean?
Scarcity always makes things look more attractive. We want what we can’t have.
It’s painfully simple, yet we catch ourselves in this trap quite often. It’s human nature.
However, on the other side of the equation there are also bearish forecasts.
According to Spencer Wheatley’s paper, the Zurich professor sees the total market capitalisation of bitcoin, currently more than US$120 billion, falling to US$41 billion.
With this type of prediction, not that much value will be left to investors who buy at these current prices, if the prediction of the model comes true.
This statistics and predictions are not just guess work. I need to make that point clear.
These experts have put a countless amount of hours into their research. It’s hard to know which side will be right, but that’s the one thing we know for certain.
One of them will be.
It’s up to investors to make that educated guess.
With the recent price correction that has taken place, some investors are wondering if now is a good time to invest, while others are wondering if they should cash out while they still have a chance.
Looking ahead, bitcoin’s price may fall further. The recent rejection by SEC of a bitcoin EFT has taken a hit on the cryptocurrency, but some believe it’s only a matter of time before it’s approved.
The uncertainty of bitcoin both adds and takes away from its value. It will be interesting to see what happens next.
For Money Morning
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