$20,000!
Daily Ramble
Bitcoin breaking the previous all-time high of $20k has knocked me off my typical routine today. I did not anticipate it to be such an emotional experience — it’s been quite the ride for both my family and I participating in one full cycle with Bitcoin. A fortune made and lost. I know I’m not the only one, but those of us that weathered that storm have front row seats to a promise of a bright new future.
This cycle, I’m anticipating a top anywhere between $100k - $500k per Bitcoin. I realize exactly how insane I sound to those reading these words, but I also thought it would be insane for Bitcoin to reach more than $5000 in 2017 when it started the year at $1000. Yeah, it ended at $20k.
Why does it sound so insane? Because we’re terrible at exponential numbers. Let me give an example. If I asked you how thick a piece of paper would be if you folded it in half 30 times, what would you say? As thick as a laptop? A book? A desk? Your home? The Alps? Outer space? Ok, finally, you got it, outer space. That’s right, a single piece of paper folded 30 times would be thick enough to reach outside our atmosphere. The power of exponentials.
Bringing it back to Bitcoin, it moves exponentially. This is due to supply shortages. It’s only after studying the chart that it’s clear when it goes on big moves that the moves are exponential in nature. In 2016, when it cleared the previous all-time high, it jumped 5x in the next 4 months. If the price did the same this time, that puts us at $100k. But we know it did 20x after it cleared the previous all-time high.
$100k-$500k per Bitcoin are insane numbers, yes. But not unrealistic given Bitcoin’s history.
Favorite Thing on the Interwebs Today
In honor of the next wave.
Bitcoin Price Prediction
Yesterday: $19k - $20k
Today: $19.3k - $24k
Tomorrow: $19.3k-$24k
The wall has been breached. Now that I’ve gotten in the rhythm of writing price predictions, and realized I get them out midday, it seemed like a good idea to stretch and give some prediction for tomorrow’s price action. Since we just broke $20k, we’re in volatile territory, and the price may swing quite a bit. When an asset goes into price discovery, i.e. above all-time highs, the market can get a bit wild. If you’re trying to trade this, don’t do it with tight price expectations.
Bitcoin Ed Bite
I’m too bloody fired up to get much out about Bitcoin mining today. So let me write about something more exciting: Bitcoin’s potential.
Bitcoin’s current phase is “digital gold”. Money has three properties that make it money: it’s used to store value, exchange value, and as a pricing unit. While Bitcoin can be used to exchange value and to price other assets, most see it as simply a store of value. To become money, Bitcoin needs to be a proven and accepted store of value. Only then will people begin to exchange it and price in it. It’s on its way to becoming money, but not there yet.
As central banks print more money, each unit of money in circulation becomes worth less. We could say that Bitcoin is a free market reaction to central banks not protecting the store of value aspect of money. We can blame it on the money printed as a result of the pandemic, but the printing has gone on for much, much longer. As the price of Bitcoin goes up, it highlights that central bank created money is not a safe store of value. Bitcoin’s price is a beacon showing to the world that the fiat banking system is no different than the naked emperor walking down the street surrounded by royalty.
And this next wave of adoption will cause too many people to realize the emperor is naked to allow the current system to continue as is. Separation of money and state is coming. The last major shift in state power was the separation of church and state — I’m pretty sure we’re all happy that happened.
Here’s to a brighter, freer future.
Thanks for reading,
Kent
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