Today with Bitcoin rising above its prior six-month highs, there are a lot of different ideas about just how far this rally might go, and how that it should influence investor decisions.
You know what they say about opinions – everybody’s got one!
Bitcoin leapt up in trading today to break $11,000 before settling back down to around $10,800.
Now people are talking Bitcoin $20,000, and Bitcoin $40,000 and Bitcoin $100,000…
If you want something a bit more concrete, you can take a look at estimates from Trace Mayer, a podcaster and crypto guru, who outlined new analysis today based on his ‘Mayer Multiple’ predictive tool:
“The Mayer Multiple is a calculation achieved by dividing the current bitcoin price by its 200-day moving average,” writes William Suberg at Cointelegraph, describing the technique.
Suberg writes that although Mayer doesn’t endorse the $40,000, “the Mayer Multiple considers moves through $15,000, $21,000 and then $30,500 to be probable.”
Mayer also warns investors about the possibility of Bitcoin becoming overvalued.
Commenting on Suberg’s story, Frances Erdman III links it to the use of Facebook’s new Libra coin, which is due to come out this year:
“If Libra goes out and goes big, this will propel BTC to 50K – 60K by year’s end because ppl can use Bitcoin to buy Libra and use it as reserve,” Erdman writes, “so an institution can purchase say 100 million worth of bitcoin and use that as collatoral to go out and borrow 100 million of Libra to lend out for profits as example.”
Not everybody is as bullish.
“Don’t get fooled by the dead-cat bounce this year,” Whitney Tilson, founder of Empire Financial Research and a former hedge-fund manager said according to a Bloomberg report, calling BTC activity a “techno-libertarian pump and dump scheme.”
In comments today, Erdman has something to say about this, too – in an interesting correlation to past commodities, he suggests
People warning of “dead cat bounce” are in basically 1930’s thinking. Computation … is a resource. …. It is not unlike whale oil – when processed correctly it provided fuel for lamps to light houses in the 1800’s. Computation is basically taking electrictiy and processing it to do useful work of one form or another, … Whale oil by itself is nothing and electricity by itself is nothing but process these things – oil into lamp fuel, electricity into solving math problems that provide utility to society – and these things become resources with market demand. Blockchain and Bitcoin is another type of computational resource… Maybe Bitcoin won’t “moon” this year or next, but the computational resource it provides is undeniable and continuing to deny it makes one sound like a flat earther, just a refusal to see facts. The train is leaving the station, whether or not one gets on board shows what side of history one is on – candle wax, or whale oil.”
This perspective is likely shared by many hodlers who aren’t sweating any negative news – because despite trends, they see BTC and the underlying technology as a phenomenon of the times. If you believe this, your buy and hold or other plan will make sense despite whatever analysts say about end of year value.