Pls sir, Target?

The above question, asked by so many retail investors at the end of 2017 that it became a meme, has started appearing once again in the crypto community.  It is easy to pluck a moonshot number out of the air, but Bitcoin predictions are notoriously inaccurate.  Obviously no-one has a crystal ball, however an increasing number of serious analysts have turned their attention to this question. Some sensible models now exist, and as Bitcoin gains wide acceptance as a new class of asset, comparisons to legacy assets are now more realistic.

Meanwhile, we have entered uncharted territory. Governments have collectively decided that they aren’t going to be limited by annoying things like debt-to-GBP ratios, ushering in a new era of early-MMT (modern monetary theory). This has caused stock markets to surge to all-time-highs despite us being in an unprecedented economic crisis, and other asset bubbles also appear well underway.

Many have turned to Gold, which briefly made new all-time-highs. However, attention has rightly turned to a more scarce & digital alternative to Gold … i.e. Bitcoin.

Given the number of people with exposure to Bitcoin, we are probably entering a new ‘early majority’ phase … where Bitcoin starts to go mainstream.  We can see how that might be facilitated, with PayPal recently opening up crypto purchases for their US customers with the aim to open it to all of their >300 million customers globally.

If that is the case, then we will likely 10x the number of Bitcoin investors in the next bull cycle that we are entering (confirmed when Bitcoin breaks its all-time high price which appears imminent)

So what happens to price?

Below is a table of assets and their approximate sizes, along with the equivalent price per Bitcoin should it reach the same ‘market cap’ size:

Asset Size in $ Equivalent price per BTC
Bitcoin ATH ~$370 billion $19,900
  1 Trillion   $54,000
USD M0 Supply 1.9 Trillion $102,000
Apple   2.1 Trillion $113,000
FAANG stocks   6 Trillion $322,000
Nasdaq 2000 bubble   6.7 Trillion $360,000
Gold   ~9 Trillion $484,000
Negative Yielding Bonds ~17 Trillion $918,000
Global Equities 100 Trillion $5.4million
Global Real Estate 200 Trillion $10.8million
Which assets could Bitcoin ‘flippen’?

Below is a table of the most prominent Bitcoin forecasting models and their predictions for where we might be in 12 months:

Model / Forecast Price per BTC
Bayern LB Stock-to-Flow $90,000
PlanB Stock-to-Flow $100,000
JP Morgan (2.6 Trillion – matching private sector investment in Gold) $140,000
Logarithmic Regression (Rainbow Chart – 01/01/2021) $185,000
‘Top Cap’ Model (Willy Woo) $200,000-300,000
Stock-to-Flow Cross-Asset Model (PlanB – 2020 to 2024) $288,000
CitiFX Technical Analysis (end 2021) $318,315
Fibonnaci Extension (21x retracement by end 2021 – fits last cycle) $352,088
‘Cycle Repeat’ Model (Digitalik, Oct 2021) $394,500

Prior Halving Cycle Returns

  $ Price @ Halving Subsequent Peak Multiple Days Estimate?
1 12.2 1,156.12 ~95 371  
2 662.78 20,089 ~30 525  
3 8804.48 ??? ~10-30x ? ~500 ? $90,000-260,000

Time will tell whether ‘halving’ returns are diminishing (halving 2 returned roughly 1/3rd of halving 1) or not

Comparison of multiples of cycle peaks

  $ Price Peak Subsequent $ Post-Halving Peak Multiple Estimate?
0>1  31.9 1,156.12 ~36x  
1>2  1,156.12 20,089 ~17  
2>3  20,089 ??? ~8-17 $160,000-329,000

Peak to peak multiples may also be diminishing (roughly halving each time)

Each investor will have to decide for themselves which values / forecasts are reasonable or not, and when comparing to the size of other asset classes whether you should include the entire cryptocurrency universe, or not.

 

My alternative to having a price target threshold for taking profits:

Time-based Profit-Taking

If you believe that Bitcoin’s cycles will continue and revolve around halving events, then you should begin to unwind your investment in Bitcoin 350-525 days after a halving event and then scaling back in following approximately a year after an obvious price peak.

This cycle, that means you should be selling from June to December 2021 … probably with increasing intensity each month.

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If you liked this article, please consider donating to my son’s cold storage (which he won’t get for 11.5 years, when he turns 18): 1AzmnauEdrTZbhrE7z3o4JPe2bTJKMXLyv

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