How High Can Bitcoin Go Up In Value

How High Can Bitcoin Go Up In Value

Having been accustomed to a managed market, the perks of an open market has made bitcoin very popular over the years. I think we can all agree that bitcoin (BTC) is “interesting.” One of the primary reasons that bitcoin is interesting is the mystery surrounding it in which nobody knows what will happen going forward.

Unknowns and big swings up and down are characteristics of open markets. It’s impossible to forecast bitcoin’s future price because virtually all the future inputs are unknown.

Bitcoin: The Abstract Gold

This abstract gold may not survive what looks like a bubble. The latest run-up looks decidedly frothy. At the time, its price looked extraordinary, at $8.74 (£6.46) for one bitcoin. Many will now wish they had invested back then.

This week, the price of one bitcoin rose to a new high of over $11,300, its value having risen by more than 1,000pc since the start of the year. Its value has not just gone up, but is doing so at increasingly rapid rates, a parabolic curve that looks to many like a classic bubble.

This abstract gold may not survive what looks like a bubble,” the author mused. “The latest run-up looks decidedly frothy,” At the time, its price looked extraordinary, at $8.74 (£6.46) for one bitcoin. Many will now wish they had invested back then.

Bitcoin Explodes in Value

This week, the price of one bitcoin rose to a new high of over $11,300, its value having risen by more than 1,000pc since the start of the year. Its value has not just gone up, but is doing so at increasingly rapid rates, a parabolic curve that looks to many like a classic bubble.

Put simply, while Bitcoin has exploded in value and popularity, the base technology has remained stagnant. And that casts a shadow on its future — right when competition among cryptocurrencies is on fire.

Bitcoin is here to stay indeed just like fiat money and PayPal. Some big changes have happened, but not on Bitcoin's blockchain. Instead, several projects "hard forked" from Bitcoin, taking over its blockchain history but making changes to the software. The most prominent of these, Bitcoin Cash, initially seemed to be a hastily put together project, but recently it gained support of some cryptocurrency pioneers.

The few metrics that we do have are of questionable value. Bitcoin's scarcity (there will only be 21 million bitcoins minted) is important but one could argue that other cryptocurrencies, which are being created daily, create a coin inflation of sorts. Commonly cited Metcalfe's law, which (roughly) says that a network's value goes up with the number of users on the network, would make sense if Bitcoin users were actually using it as a payment system. With most users simply stocking up on Bitcoin and/or trading it, Metcalfe's law becomes less relevant, and perhaps doesn't apply at all.

That said, the market that Bitcoin is poised to disrupt — the market of finance — is vast, and Bitcoin, with its $172 billion market share is still a fairly small dot on the radar. If you're optimistic enough, you'll always find a metric by which Bitcoin still has plenty of room for growth.

Dreams about Bitcoin replacing all fiat currency one day aside, the answer for Bitcoin's price rise is simple: It's a radical new technology with untapped potential that has the first mover advantage and plenty of good old hype. This, however, cannot go on forever if the technology itself doesn't move forward, and Bitcoin's usefulness is presently dubious at best.