{"id":12229,"date":"2021-12-29T22:30:00","date_gmt":"2021-12-29T22:30:00","guid":{"rendered":"http:\/\/ci0295f923900026c3"},"modified":"2021-12-29T22:30:00","modified_gmt":"2021-12-29T22:30:00","slug":"the-bitcoin-price-looking-to-the-future","status":"publish","type":"post","link":"https:\/\/bitcoinmagazine.com\/markets\/the-bitcoin-price-looking-to-the-future","title":{"rendered":"The Bitcoin Price And Looking To The Future"},"content":{"rendered":"
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As we come to the end of 2021, it\u2019s popular to reflect on the year gone by, and produce crystal balls to predict the future bitcoin price. <\/p>\n

Firstly, though, one of my favourite thoughts about the future in general comes from Jeff Bezos<\/a>.<\/p>\n

\n

\u201cI very frequently get the question \u2018What\u2019s going to change in the next 10 years?\u2019 And that is a very interesting question; it\u2019s a very common one. I almost never get the question \u2018What\u2019s not going to change in the next 10 years?\u2019 And I submit to you that that second question is actually the more important of the two – because you can build a business strategy around the things that are stable in time … When you have something that you know is true, even over the long term, you can afford to put a lot of energy into it.\u201d<\/em><\/p>\n<\/blockquote>\n

For Amazon, what Bezos meant was that for them what won\u2019t change is that customers will want a large choice of products, low prices, and speed of delivery. This is what they have built Amazon around.<\/p>\n

So how does this apply into the coming year, and to Bitcoin? As we enter 2022 we live in a hugely uncertain world, with COVID-19, record debt levels, rising inflation, socioeconomic inequalities and rising geopolitical tensions. I submit to you in turn that Bitcoin\u2019s monetary policy and general structure is one of the very few things on the planet that are not going to change over the next 10 years, or the next 20 years, or even the next 30 years. And that stability is a source of strength for anyone holding bitcoin, and a major incentive for anyone considering a long-term position.<\/p>\n

Let\u2019s further consider that 30-year time period for a second in the wider macro context. As I write this (December 7), the 30-year U.S. Treasury yield is approximately 1.7% per annum. This suggests that if we buy a 30-year treasury bond and hold it until 2051, it will return 1.7% per year, or approximately 66% compounded. $1,000 would become $1,660 in 2051 if compounded at that rate.<\/p>\n

Though that treasury return is termed \u201crisk-free,\u201d we can\u2019t predict the purchasing power of those dollars in 30 years time. Noone can say. And if you want to envisage just how far away 2051 is, consider that 30 years back in time is 1991. We\u2019re talking a world just after the fall of the Berlin Wall, of the Gulf War (the first one), of Mikhail Gorbachev, of President George Bush (senior!); all this was before the explosion of the internet, and when mobile phones were scarce and purely for \u201cyuppies.\u201d<\/p>\n

What would have an investor been faced with back in 1991, considering a 30-year treasury investment? The approx 30-year yield at the end of that year was 7.4% per annum. That\u2019s compared to 1.7% now, as noted earlier. Prices are inverse to yields, so today\u2019s bond prices are sky high by comparison to 30 years ago. And since other asset classes (equity, property, etc.) are priced relative to the risk-free rate, it is not surprising we are in an everything bubble.<\/p>\n

It\u2019s for this reason that the likes of Preston Pysh and Greg Foss predict<\/a> bitcoin potentially eating into global bond markets. It matters little that bitcoin has no risk-free yield when an increasing number of bonds are negative-yielding in real terms. And for a long-term investor, what are the chances that $1,000 worth of Bitcoin will likely return more than $1,660 in 30 years time? If you agree that it could be vastly higher, even if you assign a probability that Bitcoin dies completely, then perhaps you\u2019re onto a question of position size.<\/p>\n

So what of the future bitcoin price? I like the analogy of bitcoin as an economic battery, charging up on increasing adoption, and decreasing in value in periods where holders run for the hills. The price is simply a snapshot in time of buyer meeting seller at the margin to agree the latest price for acquiring the use of this battery for a certain amount of bitcoin. For every participant, their holding could also be viewed as a two-dimensional function of how much bitcoin they hold, and how long they are holding it for. Term it \u201cbitcoin years\u201d (210 million of those every decade) or \u201csatoshi seconds\u201d (considerably more!). On an ongoing basis all buyers choose their holding period as desired. <\/p>\n

Given the supply is fixed, the only element that determines price is demand – from new buyers that don\u2019t yet hold bitcoin, but also continued demand from existing holders continuing to accumulate and hodl – i.e., how long is that time period? It\u2019s nigh on impossible to accurately predict either future demand from newcomers, and continued hodling demand from current bitcoiners. Therefore any models seeking to predict future price are almost by definition junk, including stock-to-flow (listen<\/a> to Cory Klippstein if you want far better specifics on this). It\u2019s for this reason too that Michael Saylor says<\/a> \u201cAll your models are destroyed.\u201d<\/p>\n

This is not to say I’m not hugely bullish. It’s just that bitcoin price predictions are a bit of a waste of time. Back to the sentiment of Bezos – don\u2019t try and predict exactly what will change in the world in future, but focus more on the core elements of Bitcoin that won\u2019t change.<\/p>\n

This is a guest post by BitcoinActuary. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc. or <\/em>Bitcoin Magazine.<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"

A common question, there are many aspects that affect the price of bitcoin; what can we focus on going into 2022?<\/p>\n","protected":false},"author":2720,"featured_media":8288,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[34],"tags":[132,1607,1831],"class_list":["post-12229","post","type-post","status-publish","format-standard","has-post-thumbnail","category-markets","tag-bitcoin-price","tag-economics","tag-martys-bent"],"author_data":{"id":2720,"name":"Bitcoinactuary","nicename":"bitcoinactuary","avatar_url":"https:\/\/secure.gravatar.com\/avatar\/1c048b026f4d5009f049ca519b92fde8fdb06810e0a330cfbac81057f6d9b092?s=96&d=robohash&r=g"},"featured_image_url":"https:\/\/bitcoinmagazine.com\/wp-content\/uploads\/2024\/11\/img_6101.png","_links":{"self":[{"href":"https:\/\/bitcoinmagazine.com\/wp-json\/wp\/v2\/posts\/12229","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/bitcoinmagazine.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/bitcoinmagazine.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/bitcoinmagazine.com\/wp-json\/wp\/v2\/users\/2720"}],"replies":[{"embeddable":true,"href":"https:\/\/bitcoinmagazine.com\/wp-json\/wp\/v2\/comments?post=12229"}],"version-history":[{"count":0,"href":"https:\/\/bitcoinmagazine.com\/wp-json\/wp\/v2\/posts\/12229\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/bitcoinmagazine.com\/wp-json\/wp\/v2\/media\/8288"}],"wp:attachment":[{"href":"https:\/\/bitcoinmagazine.com\/wp-json\/wp\/v2\/media?parent=12229"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/bitcoinmagazine.com\/wp-json\/wp\/v2\/categories?post=12229"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/bitcoinmagazine.com\/wp-json\/wp\/v2\/tags?post=12229"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}