How can Bitcoin reach $50k this year
Bitcoin at 50k and Ethereum at 5k by end of 2018; this was the message floating around on the market ever since Bitcoin’s meteoric rise last year. Yes, there were other coins that had a higher percentage growth, but each minute increase in the coin today results in higher per unit change, which makes it very interesting for mainstream investors. And just as all that excitement was running at an all-time high, the great crash of 2018 happened.
Suddenly, the same crypto experts were speaking about possibilities of Bitcoin going to zero. Everything wrong about the coin began to surface and Bitcoin alternatives began gaining prominence. The coin is now on a recovery and the talk of 50k has begun again. But before this becomes an emotional conversation, we did some research to find out if this number is real, and if so, how can Bitcoin reach that number this year.
The McAfee Theory
John McAfee claimed to be one of the biggest crypto miners in the world (he also recently admitted that he quit the business because it was “boring”) and as a mathematician, he says that he understands the beauty of cryptocurrencies. Apart from the occasional coin shilling, he is best known for his ongoing bet where he says that he will eat his own dick if Bitcoin doesn’t hit 1 Million USD by 2020.
After the crash, the spotlight was back on him and his bet. He held his ground saying that the cryptocurrency was well on track to hit the number irrespective and that 1M USD by 2020 was a conservative estimate. His explanation for his belief was something to this effect –
- BTC is not a fiat currency and it is limited in supply.
- The compute and electricity that goes into creating a single bitcoin is constantly going up.
- Given that there is a proof of work for every BTC mined, it has inherent value.
- The other thing that gives BTC its value is the size of the network. As more people join the network, the value of the coin also goes up.
- Also, as more fiat comes into BTC, its value increases.
As crazy and weird as McAffe’s public perception may be, this logic does make sense. However, in all of his proclamations, there really hasn’t been any empirical reasoning with numbers mentioned ever. That’s when we came across Coincheckup.
Coincheckup is a site that came up with a standardized a research process for cryptocurrencies and their research. It started gaining some traction late last year and they have some really well-documented research on most of the cryptocurrencies in the market. Their site claims that they have done over 9000 hours of research on crypto.
In their section for Bitcoin, they have a tab for predictions which shows exactly how Bitcoin can reach $50k in value. To an extent, the data here corroborates McAfee’s theory. Essentially, about 5.5% of the all the world’s fiat currency from accounts from central bank accounts (which can be traded for other physical currencies) is on the Bitcoin network. When this proportion gets to 32%, Bitcoin will get to $50k in value.
Things start to get interesting when we start to consider demand accounts, like current accounts, which is usually owned by companies. With this in consideration, about 1% of the world’s fiat is in bitcoin. Just over 4% of this consideration will take Bitcoin well past $50k USD. Now if you start consider all savings banks in the world, then even 1% of the world’s fiat in Bitcoin will take its value close to last year’s ATH of 23k USD. (on some exchanges).
Mainstream adoption and acceptance
Market sentiments aside, the math is quite simple – for the most part, if more fiat enters the Bitcoin network, the value of bitcoin will go up. And this is why mainstream acceptance is so important. Every new business that accepts bitcoin is a step towards that. Every new investor looking at bitcoin as a strong store of value will help the currency get there.
We hope this year sees more of that because apart from holders getting rich, it truly is about adopting a system that will give financial freedom back to the people. Anyone who was personally affected by Lehman brothers’ 2008 crash will be all too familiar with the flaws of a centralised bank controlling everything.
Hitesh Malviya is the Founder of ItsBlockchain. He is one of the most early adopters of blockchain & cryptocurrency enthusiast in India. After being into space for a few years, he started IBC in 2016 to help other early adopters learn about the technology.
Before IBC, Hitesh has founded 4 companies in the cyber security & IT space.