Where does Bitcoin stand on its way to the moon?

Bitcoin is what you might say, an innocent market. That’s because it hasn’t been around for long and the institutions living off its liquidity are primitive and not honed to razor fine tolerances of exploitation by years of super-smart competitive predation.

The more efficient a market, the closer it gets too random and unpredictability, and the less random a market is, the easier it is to call because of its inefficiencies. It is also likely to be more volatile.

This lack of bitcoin market efficiency will go away over time but for now, the development of its trading and value seems quite readable.

This is what it is saying to me:

I’ve made this a lot more complicated than I need to.

The basic signal is the price has broken out of its very recent equilibrium and is off on another vertical leg.

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The legs are, due to the obscure maths of randomness, highly likely to be equal in length. This is simply explained by the idea that it’s a ‘déjà vu’ event--the price is on the rise again for the same reason it initially rose and therefore the impulse will be similar. The mathematical reason is more complicated and comes from the idea that in a random world you are always halfway to somewhere. Whatever the reason, this chart is a very strong signal that we are on the vertical and will clear $10,000 in short order.

For those cynical of this sort of analysis, you can read my crystal ball reading over the last year on Bitcoin and you will see I’ve been very fortunate in my predictions.

So when it clears $10,000, what then?

Above $10,000 the call will be simple, is this the end of a commodity-style aftershock or the beginning of another parabola up to who knows where? If you looked back at the commodity boom of the 1970s you will note various commodities trying to repeat their price bubbles during the commodity boom around the oil shock. It would make sense if bitcoin repeated this cycle of ever-decreasing sequels to its original bubble.

It’s a possibility and an idea to park nearby as the profits escalate.

I can doodle all over the chart but it’s hard to come up with a road ahead so it means we need to look elsewhere for weight points. Market cap is a popular and useful number. We can look at what bitcoin’s total worth as an asset class can be and reverse a price out of that.

Here are some ideas.

BTC =$0

Why? Because it will be banned, this time prohibition will work. It’s bugged; isn’t all tech, aren’t all utopian ideas, and when the bug is exposed, poof, the value will be gone. Bitcoin is against god, after all, another "this time is different" magic money thing. As such it is doomed.

BTC = $150,000-$200,000

Bitcoin is as good or better than gold. This idea that bitcoin will replace or be as useful, and therefore as much in demand as gold, is subject to take up and world events. Disasters of a 20th Century scale would turbocharge acceptance, but acceptance is ongoing without such a driver. You don’t have to worry about your stack of PGM, as the marketing people say, what is good for jeans is good for Levi’s.

BTC = $1,000,000

At some point 1 Satoshi will be worth 1c, so 1 BTC = $1m.

I love this idea but it is flawed because BTC can be split via 0.1 of a sat or smaller off the chain, by exchanges, so a valuation per Satoshi is not a real limit to tie values to. Cryptocurrencies are fungible, can be virtually created like banks invent cash, be moved by derivative contracts, etc. The limit on bitcoin might now be only 21 million bitcoins, but rules can be changed. It’s unlikely, but it can happen. As such, a limited supply is not so limited, so it is a weak argument to say 1 Satoshi will be 1c because those limits in practice are imaginary. Yet unlike coins with no limits, bitcoin’s limits will be hard to shift and those limits, halving and total supply are near to being reached.

BTC= $1.2m , $0.7m , $0.15m

As a global currency bitcoin might be the same size in aggregate as say France’s M2, or Russia’s or India’s or the U.S.’s. Here is some equivalence:

You will note it is hard to make a case for a bitcoin price that is lower than the moon.

There is a reason for this and that is, bitcoin is currently small by financial asset standards. U.S. stock markets alone are worth $25 trillion. This aside, the whole valuation of the cryptocurrency universe is equal to the market cap of one decent-sized Nasdaq tech company.

Back in 2017, my question was, is this the "tech boom" equivalent of 1995 or 1999 for crypto? I now feel that if this was the "tech boom" all over again, we haven’t even reached the 1990s yet. This is like the days of AOL and CompuServe fighting over dial-up. That makes prediction of ‘what next’ in the coming months tremendously hard yet delivers a simple call.

This is still the beginning of the beginning and the direction of travel for years to come is, UP.