Conflicting predictions on the price of Bitcoin
Conflicting predictions on the price of Bitcoin
Bitcoin

Conflicting predictions on the price of Bitcoin

By Marco Cavicchioli - 30 Nov 2022

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In these days of uncertainty, a number of very different predictions on the price of Bitcoin are circulating. 

However, it is necessary to differentiate short-term predictions from medium- to long-term ones, because the biggest differences depend precisely on the period taken into consideration. 

Short-term predictions on the price of Bitcoin

In the short term, there are many who argue that the price of Bitcoin could fall. 

For example, according to experienced investor Mark Mobius, founder of Mobius Capital, the price could even fall as low as $10,000

He revealed this in a recent interview granted to Bloomberg, saying he believes $10,000 is the next destination for the price of BTC. 

However, he also admitted that cryptocurrencies are “too dangerous” for him, and therefore he will not invest his own money or that of his clients in them, but added that he believes “they are here to stay because” thanks to many investors who have confidence in them.

In addition, he said he thinks it is very curious and interesting that the price of Bitcoin has basically held up through the slumps this year.

Mobius is not alone in his belief that the 2022 bottom has not yet been touched. 

In addition to his prediction of $10,000, others also argue that the price could still fall to $12,000 or $11,000, although there seem to be more who argue that a further descent could stop at $13,000 or $14,000. 

A further decline in the market

The fact is that there are as many as two factors that seem to point precisely to the possibility of a further descent over the short term to those levels. 

The first relates to the two previous post-bubble bear markets. Indeed, in both cases the bottom was touched at -85% from the previous highs, while this year for now it has stopped at -77%. 

However, it is worth mentioning that the bubble of 2021 was much smaller in proportion to the gigantic and resounding one of 2013 or the otherwise remarkable one of 2017. In fact, in 2013 the price of Bitcoin grew 8,000% in a single year until the bubble burst, while in 2017 it still did a remarkable +1,700%. 

By contrast, in 2021 the speculative bubble on the price of Bitcoin stopped at a not particularly outstanding +245%, so even the post-bubble fall may have a smaller magnitude than in the past. 

To this, it is worth adding that after the 2013 bubble the bottom was touched in January 2015, and not in December of the following year, as happened instead in 2017/2018. 

So there would be nothing strange if the bottom of this phase was not touched in December 2022, but in January 2023. 

The second factor is the fact that historically at the end of the year the price of Bitcoin hardly lateralizes. While during bull runs it is precisely between November and December that it usually sets highs, during down years it is precisely between November and December that such declines often intensify. 

In this respect, though, it should be added that already in this month of November the decline has been significant, so in theory the bottom might have already been reached. 

In fact, if there had been no FTX fiasco it is possible that we would not have fallen below June’s $17,500, and the bottom in November was $15,500 anyway. 

It is probably this data that makes Mobius find it interesting that the price of Bitcoin has largely held up this year. Something vaguely similar happened between March and April 2020, when all financial markets collapsed due to the onset of the pandemic. In fact, the price of Bitcoin over the weeks following the collapse reacted quite well by recovering all losses as early as May. 

Bitcoin (BTC) price: medium-term predictions

The matter changes completely if one shifts the horizon of the forecast a little further ahead. 

In fact, it is rare that those who are predicting a decline in the short term also comment on the medium to long term. 

In fact, as in the case of Mobius, there are quite a few who are speculating on a further decline in the short term, but at the same time stating that cryptocurrencies are not destined to disappear from the markets. 

Instead, there are several analysts who are still optimistic about Bitcoin’s price, both in the medium and long term. 

For example, venture capitalist Tim Draper reiterated his prediction that by the end of 2023 the price of BTC will reach $250,000. 

However, it is worth specifying that while short-term forecasts are based on signals directly from the markets, medium- and long-term forecasts are based on assumptions that are not deduced from the current market situation, but from a hypothetical long-term trend in the price of Bitcoin. 

To be fair, until a few months ago there were also those who believed that the price of BTC could rise again even during 2022, when in fact this was not the case. However, the potential for eventual growth in the coming years is there. 

Halving and long-term predictions

Even more difficult is to make long-term forecasts, but if in the short term the price of Bitcoin is strongly influenced by the dynamics of financial markets, in the long term it is influenced by other dynamics, such as its monetary policy and the monetary policies of Central Banks. 

Indeed, paradoxically it seems that so far it has been easier to guess Bitcoin’s long-term price trend than its short-term changes. 

For example, renowned investor Cathie Wood of Ark Invest recently reiterated that she still believes it is possible for Bitcoin’s price to rise to $1 million by 2030. 

The fact is that Bitcoin has a cycle of about four years due to the halving

The halving occurs exactly every 210,000 blocks mined and added to the blockchain, and at a rate of about 10 minutes per block there are roughly 3 years and 10 months between halving events. 

The next halving is scheduled for spring 2024, and in all three previous cases a bull run was triggered the year following the halving. 

In fact, halving is Bitcoin’s only monetary policy measure, and it involves halving the BTC that is created and given as a reward to those who can mine the blocks. Since this reward is the only form of BTC creation in existence, halving it also inevitably decreases the inflation rate of its money supply. 

The halving cycle is certain and predictable, while any price consequences are not. In fact, the halving directly affects only the supply of BTC in the markets, but not demand. However, with demand being equal, a reduction in supply inevitably produces an increase in price. 

So far, this has always been the case, after the halving of 2012, 2016, and 2020, and should the demand for Bitcoin not reduce significantly, the same could happen after 2024. 

While the halving cycle makes the inflation rate of the BTC money supply highly predictable, and especially monetary policy measures over the long term, this is not enough to make its price trend predictable.

Marco Cavicchioli

Born in 1975, Marco has been the first to talk about Bitcoin on YouTube in Italy. He founded ilBitcoin.news and the Facebook group" Bitcoin Italia (open and without scam) ".

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