Bitcoin Will Be Trading Above $9,000 At The End of April 2020
Crypto isn’t my specialty, but I’ve held small positions for the last three years or so. In that time the price has gyrated from about $2,000 per coin to nearly $20,000. What I remember most about the latter instance is that everyone I knew from entrepreneurs to professional filmmakers were offering up lectures on why I should put all of my disposable income onto the blockchain.
A few months later, it crashed back to earth, landing under $4,000. I’d still made a minor profit, but I suspect many others had been left with a permanent bad taste in their mouth.
To me, owning crypto is like buying lotto tickets. It’s relatively cheap and easy to acquire, and maybe one day it will turn you into a millionaire. A buddy and I ran a little Litecoin mining operation out of my apartment back when it was still trading for a couple of bucks. I don’t remember exactly how much we ended up selling the stuff for, but if we had held on until today, we would be about 20 times richer. If we had sold in late 2017, well, many things would be different.
I bring this all up in order to say the following: predicting the long term price movements of cryptocurrency is neither science nor art. It is guesswork, pure and simple. You are bouncing from speculative bubble to speculative bubble, searching for signal, as the world scrambles to figure out how much of the old imaginary currency, the new imaginary currency should be worth.
I suspect that in the very, very long run, prices will appreciate much like equities do, but I couldn’t even begin to guess over what time frame, nor when we’ll hit some kind of equilibrium.
Why then am I making this prediction? Because on about May 12th, an event that is parochially called the “halvening” is happening in Bitcoin-land. Essentially, the rewards from mining each block of crypto is going to be cut in half. This has happened several times before, and is designed to keep inflation in check.
What’s interesting here is that reward halving tends to drive big jumps in price. The 2012 halving is thought to have triggered the massive 2013 rally that lifted bitcoin from $13 to $260. The same thing happened when Litecoin halved, and the price spiked from $2 to $8.
So why am I not betting on a run up past May? Mostly because this isn’t 2012. Folks over at J.P. Morgan and Goldman know what Bitcoin is, there are hedge funds trading the stuff — the market has become far more efficient. As a result, I suspect, that the recent price movements we are seeing represent traders pricing in the rally ahead of schedule. I also suspect that the event itself will be somewhat more muted than in the ancient days of last decade, and may actually reverse course as rally speculators leave the market.
Until May though, you gotta buy those lotto tickets.
I’m buying a little crypto again, not because I believe in the rally, but because it’s a good apocalypse hedge. That said, if the halving does create a new leg, I’d like to be a part of that.
I wouldn’t suggest sacrificing your life savings on the blockchain, but if you’re looking for some short term price action, the next few months have potential.
Strength of Prediction
My initial odds are 65% that Bitcoin will be trading above $9,000 at the end of April, 2020. I plan to revisit this prediction again in a couple of months.
Published at Thu, 13 Feb 2020 23:26:20 +0000
