Due to the upcoming halving I have updated my most important chart. My chart from April 2019 is still valid. This time, I changed it to a line chart with OHLC/4. Bitcoin has strong swings. To get a clear picture for a long-term view, I recommend to switch to a line chart. I have also included the EMA/MA-Cross.
Now let's get to the why...
There are a lot of of forecasts that see BTC at 1 million. I tried to analyze this value from a macro-economic perspective. And by now I still come to the same result. In the following line, I will briefly present my insights to you and invite you to discuss ...
1. When does a currency become a currency?
We see three main currencies currently. Dollar, Euro and RMB (China). Dollar wants to remain the leading currency. Euro wants to become an alternative. And the Chinese want to create a new Asian reserve currency with RMB. Of course there are other important currencies. But I will leave them for now. In times of Corona it has been shown that the dollar has maintained its position as the leading currency. Gold has also performed well.
My first question is. Which smallest unit does a currency need? In the case of the dollar and the euro , it is Cent. At RMB it is a Fen. So 1/100. Especially for currencies with similar values, the "psychological exchange" is quite easier. Since we can imagine the value better. Question therefore. How high would the value of a Bitcoin or a Satoshi have to be, so that we can deal with it well? Relatively easy to answer: 1 Satoshi = 1 Cent (Penny). By th way. It is important that we focus on the usability of Bitcoin and not on the Bitcoin price. Only from a high market capitalization on is there a real usability. And this market capitalisation should be at least at 1 million, otherwise Bitcoin would maybe remain a speculative object and would not become a real currency.
1 BTC = 1,000,000 USD = 21,000,000,000,000 USD Market capitalization (21 trillion)
The monetary supply 2017/18 from:
China ~25 trillion USD
USA ~14 trillion USD
EUR ~14 trillion USD
The total amount of gold in the world has a current value of ~7 trillion USD
Why is a high market capitalisation easily possible? From today's point of view this is just 20 times the market capitalization of Apple or Amazon. For comparison, the market capitalization of the 100 largest companies worldwide is currently still around 15 trillion. The current global debt level is around 250 trillion. And it is going to grow after corona strongly. The International Monetary Fund (IMF) has identified debt as one of the major risks for the global economy.
2. What "technical" law speaks for it?
There are some who doubt the following approach, but I think it makes sense to discuss Moore's Law. Moore's Law says that the performance of computers is growing exponentially. Moore's Law can be applied to all digital technologies. The Bitcoin price can also be modelled with Moore's Law or exponential growth.
However, the Bitcoin price is growing even faster than the performance of computers. For Bitcoin , the price has even doubled every five to eight months to its peak at 20,000 USD. The starting point for the forecast was chosen when the Bitcoin cost more than 10 dollars for the first time. Based on the forecast, a Bitcoin will reach one million dollars by 2028 at the latest. I think that 1 million is also the limit around that the price will oscillate at the end.
3. What are the costs for producing a Bitcoin?
Current estimates assume that the production of a Bitcoin will cost around 300,000 dollars in 2022. How high is the probability that Bitcoin will collapse? For this case the market is already too large. It is a global phenomenon with market power.
4. Will the whole banking system change?
Official digital currencies are currently being developed. Especially China is working on a digital RMB. Facebook , for example, is another example of how the topic will gain momentum. What does this mean for Bitcoin? Very simple: It helps it to establish itself as a payment alternative.
So the landscape of banking, lending and payments will change radically. The most experts now agree on this. Paper money will be an obsolete model for the coming decades.
More than 7.6 billion people live on Earth in 2019. The world's population is growing by over 200,000 people a day. Every year, the population of the earth increases by more than 80 million. According to the German Foundation for World Population, this corresponds roughly to the population of Germany. This fact alone, that billions of people will soon be able to trade with Bitcoin worldwide, changes the perspective on banking and the Bitcoin-1-million-dollars-Forecast-Idea again.
Let's see what happens.
Happy trading. :-)
My Chart - Apr 15, 2019