- Bitcoin’s fundamentals are stronger than ever
- Comparing chart types and projections suggests $1 million a viable target
- All data is subject to bias in interpretation
Bitcoin’s price is something that even the most ideological supporters cannot get away from, with million-dollar predictions recently being revisited following the spectacular quantitative easing measures put in place by the US Treasury in response to the coronavirus pandemic. But what about beyond this? Without knowing what the geopolitical landscape will look like in 10 year’s time, is there a way to estimate what the Bitcoin price will be in that time?
Bitcoin’s Fundamentals Looking Solid
As with any methods of future price prediction of an asset, we need to analyze both the fundamental and technical data to hand. Fundamentally, recent political developments have all solidified Bitcoin’s primary use case as an independent, politically agnostic store of value. This is something we can only see increasing in the coming years as the world deals with the fallout of the coronavirus and the increasing pressure on an already creaking financial system.
Logarithmic Charts Flatten the Curve
Working on the assumption that Bitcoin’s fundamentals are secure, what can past price action tell us about where we could be headed by 2030? Unfortunately, existing long term models don’t run ten years into the future, for obvious reasons, so we have to extrapolate from what we do have.
If we assume that Bitcoin follows the same trajectory of the past 11 years, then the future looks like this:
This leaves us with a range of $40 million to $4.75 billion per Bitcoin by the year 2030. Unlikely? Yes! Bitcoin’s magnitude of growth is already slowing, with each bull run with the time from peak to trough also expanding, meaning that eventually it will move out of this range and flatten out.
This takes us onto the next predictive model – the logarithmic rainbow:
This chart assumes a gently flattening curve within which the market cycles play out, with each peak and each trough taking longer to play out, although the average price continues to move up. This style of chart can be represented in another way:
Here we can see more clearly the potential patterns that might play out over time, along with the impact of the halvings. These logarithmic charts suggest a Bitcoin price range of $275,000 to $1.3 million due to a hypothesized contraction of the price range as time goes on. This is a much more viable price band, with Bitcoin not slated to break $1 million until 2028.
Another chart type we can examine is the Bitcoin Stock to Flow model. The current model only predicts to 2028, but with a little extrapolation we can tack two more years on the end, assuming that the periods in between market cycles extend over time:
As we can see, the Stock-to-Flow model predicts that by 2030 Bitcoin will be sitting pretty at $5 million, some five times higher than the upper bands of the logarithmic charts. To date, the Bitcoin price action has mirrored the chart fairly well, with the response to the supply shocks caused by the halvings clearly illustrated, although it doesn’t suggest a slackening off of the range as the logarithmic charts do, hence its higher figures.
The Conclusion? Just HODL!
So what conclusions can we draw from this variety of charts and the results they offer? Simply put, no one really knows, although we can agree that it should go up. The variance in model types and their versions of the future show just how widespread opinions are on Bitcoin’s future prices and how its market cycles will pan out.
All charts are tainted with bias and personal interpretation, no matter what the ‘science’ behind them may be, which explains why the bands of these models, and others, are so disparate.
What all the models do agree on however is that Bitcoin’s price will very likely be much higher than it is today, meaning that the best option open to you at the moment is simple – HODL.