Is It Really Possible for Bitcoin to Go This High?
Bitcoin (BTC) is not the only game in town, as there are many other competing cryptocurrencies too. But only a few of these cryptocurrencies will eventually survive, and each one fills a specific different gap in the marketplace. I see all kinds of predictions for Bitcoin, predictions calling for extreme highs, possibly as high as one million US dollars. However we need to be careful with these predictions because even in the best case scenario it could take much longer for Bitcoin to go this high. More likely than not, even the best predictions will take twice as long, if not longer, to come true.
So a prediction calling for Bitcoin to reach a specific level in one year, if proven right, it will likely take two years. And that’s the safe way to view these predictions, no matter who the expert making these predictions is.
Bitcoin facilitates the transfer of large amounts of money, with the maximum possible security. It is by far very secure, if not the most secure cryptocurrency out there. Competition comes Ethereum and Litecoin, and it is for smaller size money transactions. And as Bitcoin faces more problems, these problems lead to hard forks and end up solving these problems.
Bitcoin is actually expected to reach a price of around $27,000 and $30,000 soon, without losing the momentum that we see today. And this could happen within the next 12 months! This can really happen regardless of the potential problems and short term failures that the Bitcoin blockchain faces. It’s that every time Bitcoin reaches a new target, such as $5,000 or $10,000 or 15,000 it tends to pull back and consolidate. There are many more investors and heavy duty users still waiting on the sidelines, ready to buy Bitcoin. There are many of them, so many in fact that the market can really go as high as $30,000 and remain crash-proof.
In my opinion, things will start becoming unstable once above $30,000. And this is where we will see critical levels and problems. At those levels Bitcoin may or may not be able to compete with Litecoin and Ethereum.
How to Gauge the Bitcoin Rally
Bitcoin should continue to rally in such a way, so that it maintains a meaningful ratio relative to Litecoin and Ethereum. Once the cryptocurrency markets stabilize over the next few months, we should see some kind of ratio developing. This should be something similar to the Gold to Silver ratio which tends to rotate around 47:1. So over the coming months we should pay attention to the consolidation periods and at what ratio Bitcoin tends to settle, relative to the other two big cryptocoins. To be more accurate, we should wait for the current hard fork events to settle down, and for prices to consolidate again.
Once we have a more meaningful picture on these ratios, we can safely gauge the trend of Bitcoin and figure out why it is rallying. If it’s rallying too much too fast, just because people are excited, we will see Bitcoin diverging higher from its normal ratio and it won’t be safe to buy and hold for too long. As it will start declining just as fast. But if all 3 major cryptocurrencies rally together and the expected ratios remain intact, then it is the entire industry that is supporting the Bitcoin rally, and we could see increasingly higher prices. The Investor Greg forum dedicates more such insights and opinion articles on Bitcoin trading action.
Differences among the Major 3 Cryptocurrencies
Simply speaking, Bitcoin is extremely secure but it takes longer to validate transactions. Ethereum is more dynamic and offers more flexibility to make changes, as opposed to Bitcoin’s fixed system. And Litecoin is a more competitive choice, offering slightly less security but much higher speed, and also it’s easier to use. The 3 cryptocurrencies together seem to complement one another, and there will be few more cryptocoins to fill other gaps in the marketplace. That’s why when all these cryptocurrencies rally together it’s a signal that the rally is solid and robust.
That’s why I view these cryptocurrencies as being important to one another, and not that one could really replace the other. There are minor areas of competition, but for the most part they are designed to serve different types of users. So it’s not silly to believe that Bitcoin could go much higher. But we care more about the medium term future, not abstract predictions. So the target of $30,000 is quite realistic over a 12 month period.
How Investors Think about Bitcoin
Cryptocurrency investors already know about these ratios that will inevitably develop, and will see Bitcoin as a great opportunity. And they will also be investing in Litecoin too, in order to possibly get better returns, by buying Litecoin when it’s diverging lower relative to Bitcoin. So effectively they will be investing in many cryptocurrencies, and will also use Bitcoin as a leading indicator.
Some investors will analyze these markets in terms of monthly and annual growth. And how much more profitable Bitcoin investing is compared to other classic markets. To them it doesn’t matter if Bitcoin reaches one million dollars, they are not so much interested in buying at possibly $300,000 in order to sell at one million dollars. It’s much more profitable to invest now and to get out at $100,000 or lower.
Bitcoin will continue to be volatile at those higher levels, if we ever see such high levels. Volatility will remain in Bitcoin for a very long time, unless there is a strong Futures and CFDs derivatives market to reduce all this extreme volatility. For now however volatility is here to stay. And so the most likely scenario is that Bitcoin will overshoot all realistic price targets and then settle a little lower for some time. So if the expected $30,000 target is reached it won’t be a smooth movement, but rather a sharp overshoot over $30,000 then a fast correction closer to the target.
Can Bitcoin price be Manipulated Higher by Few Big Investors?
No! Bitcoin price is being pushed back and forth by few big investors already, but this pressure does not last for more than few hours, at best. It’s totally impossible to manipulate Bitcoin, or any other large capitalization market for longer than few hours. Even if you are a large investment bank, the market is still larger than you are, and you will be taking the same risks as small speculators. So it is possible even for an investment bank to be totally wiped out in this kind of trading. The collective trading actions of thousands of smaller traders is always larger, it is slower but more powerful, they will end up moving the market.
It is totally impossible for few people to purposely push Bitcoin price to $30,000 and then dumb it. They will risk to lose more money than they stand to win. On the other hand, a bad rally to $30,000 can happen, due to many investors and traders buying, without being willing to hold. But in such a scenario you will be able to spot some divergence between Bitcoin and the other 2 major cryptocurrencies. So you will know in advance and will not buy Bitcoin at distorted ratio levels.
Now it’s still early because we don’t have enough data from consolidation price periods, but let’s assume that the ratio of Bitcoin to Ethereum settles around 20. And the ratio of Ethereum to Litecoin settles around 5. These 2 ratios in my opinion are enough of a measurement method, to help you gauge the quality of a rally in Bitcoin. Every time Bitcoin falls by a huge margin, you can see what is happening with these ratios, and if the ratios indicate an oversold Bitcoin, it will be a good buying opportunity. There’s no need to worry about who is pushing Bitcoin lower and for what reason. Market price cannot be manipulated for more than few hours under any circumstances. More likely, if it is going down, it’s because someone closes their long trades in order take the profits.
All Bitcoin trading platforms can facilitate good trading strategies, whether you trade the actual coin through an exchange or through a margined CFD account. You just need to be careful to trade at smaller size when trading CFD, to be able to take a temporary losing trade and to keep it open until the market rises again.
What a $30,000 Bitcoin Means, in Technical Terms
In terms of technology and blockchain adaption, reaching $30,000 in Bitcoin price will really make many negative thinkers to take a new look at the cryptocurrency markets and to rely less on traditional banking. This will include people who used to buy gold bullion and to use various classic currencies. They will see that Bitcoin is real, it costs a lot of money in electricity to produce each Bitcoin (more than $1,000). And they will see the benefits of Bitcoin, since it enables ultra low cost international transfers, which gold and classic currencies do not offer.
Moreover, there is an enormous opportunity for small import-export businesses to adapt these top 3 major cryptocurrencies for doing business. All they need is to have volatility, volatility that is higher than classic currencies. But also to see that Bitcoin stays around $30,000 for many months, or it rises gradually. And even if it falls below $30,000 it only help them import/export their goods at better prices while still being able to make the same profit. This is really huge, and if it happens it will only create more demand for these top 3 cryptocurrencies.
The only unknown are the ratios, we still don’t know what the long term ratios among the top 3 cryptocurrencies are going to be. They may not settle at 20 and 5, but towards some other number. That’s why it is wise to wait for all technical problems to be resolved and to measure these ratios over a period of several months.
In any case, it is wise to view experts’ predictions with some skepticism. That’s why I always double the projected time, or half the price target. The general prediction is for Bitcoin to reach $30,000 in less than 6 months. And that’s why I believe $30,000 in 12 months is a safer prediction. The first few months from today could help figure out those critical ratios. So that no matter what happens in the end, I can have a roadmap on the trends of these 3 cryptocurrencies.
If Bitcoin goes to $30,000 as expected, it will require further assessment, to see what could be next. And whether it could go much higher, or stop leading the other major cryptocurrencies. There is a possibility that things may reverse at some point, and we could see some other cryptocurrency being the number one. Which means the price ratios will change completely as well.
For the medium term however, I would like to see the ratios being as they are now. Bitcoin to Ethereum at 20, and Ethereum to Litecoin at 5. If I see Bitcoin to Ethereum ratio going to 25 or 30, I would sell Bitcoin and buy Ethereum immediately. The price charts cannot be used in long term technical analysis, only price ratios and market adaption news are important. Price charts are useful for day to day predictions only, and sometimes they can be misleading. That’s why I don’t use indicators such as Fibonacci extensions or price channels, they could very misleading on Bitcoin charts!
Market adaption means that we want to see more people and small businesses start using cryptocurrencies. It makes little difference if China bans these cryptocurrencies, or if the US regulates or imposes taxes on them. If more and more ordinary people start using them, then the higher Bitcoin prices will be strongly supported. No matter how unstable Bitcoin trend may appear on the charts.