Despite a recent price lull, BitMEX’s chief executive, Arthur Hayes, is still bullish on Bitcoin. At Milken Institute Asia Summit in Singapore, which Bloomberg reported on, the industry executive explained that he believes Bitcoin is ready to hit six digits within the next years.
In his remarks, Hayes stated that BTC will hit $100,000 for the first time within the next three years. Crazy!
Why BTC Will Appreciate
Hayes’s latest prediction comes shortly after he touted a shorter-term $20,000 target for Bitcoin. For those who missed the memo, the industry executive wrote on Twitter that once the Federal Reserve starts to activate quantitative easing again, BTC could easily hit $20,000.
Quantitative easing is an unorthodox monetary policy popularized after 2008’s Great Recession. It sees central banks pump liquidity into asset markets to drive growth and push up the value of said assets.
Travis Kling, a former portfolio manager at a leading Wall Street fund that dived down the “Bitcoin rabbithole”, has explained on multiple occasions that policies like QE and low (even negative) interest rates are a bid “amongst central bankers to devalue their currencies ASAP”.
He writes that with the “entire world racing” to see who can devalue their fiat currency the fastest, assets with “PROVABLE SCARCITY” should begin to shine. By this, he is obviously referring to something like Bitcoin. As Kling said at a recent event:
“Bitcoin is currently a risk asset. But it’s a risk asset with a specific set of investment characteristics that will only become more attractive the more irresponsible monetary and fiscal policy becomes.”
A Bit Too Optimistic?
Although there are clear catalysts hinting at an impending growth cycle for the cryptocurrency markets, $100,000 by 2022/2023 may be a bit too optimistic.
In 2013, Bitcoin’s market capitalization surmounted $1 billion and $10 billion; in late-October of 2017, the same metric passed $100 billion. According to analytics site Bytetree, the next time Bitcoin’s network value reaches a new order of magnitude will be in 2025 — some six years away.
Analyst Charlie Morris wrote in the note that using a logarithmic chart, we can observe that for most of its life, Bitcoin has had an internal rate of return (IRR) of 212% per annum, which means that each year, investors have trebled their capital. However, this changed in the bear market of 2018, which resulted in Bitcoin losing the trend line due to overwhelming sell pressure and the absolute absurdity of a 212% compounding yearly growth rate ($100 would turn into $8.7 million after a decade).
While Bitcoin losing a nine-year-long trend seems harrowing, Morris goes on to point out that Bitcoin has entered into a new trend, one defined by an IRR line of 115% per annum. Should this trend continue, the analyst writes, Bitcoin could “touch a trillion dollars by 2025”, which equates to around $50,000 per coin, then $100,000 the year next.