Bitcoin at $15,000 – $20,000: Focus on Fundamentals
Is the price of Bitcoin going to spike soon? Current market situation says otherwise but some market insiders believe a higher price for the top cryptocurrency is still a sure thing with suggestions that there could even be a new all-time high.
A lot has changed in the crypto space last year which makes it extremely difficult to use past market trends to determine what is to come. Historical patterns are good to provide background information but may not be basically reliable in today’s market situation due to the influx of many new players – both good and bad – including institutions, increased over-the-counter transactions and evolving crypto exchanges.
Why fundamentals matter
Even after the recent correction, Bitcoin is the best performing asset in the last 10 years, says Anthony Pompliano, the founder and partner at Morgan Creek Digital, who backs BitPay’s prediction of a Bitcoin price between $15,000-$20,000 by the end of next year. Pompliano says people should not see the recent drop to the $3000 price range as surprising, it has to go low before getting high up.
Went on @cnni to talk about why Bitcoin isn't dead.
Don't listen to the noise. Focus on the fundamentals. pic.twitter.com/hgwR7eyhND
— Pomp ? (@APompliano) November 23, 2018
“I think a lot of people focus on the price but the most important thing to remember is that fundamentals have not changed,” he says. “We have a very deep conviction on a long-term basis and if you look at the fundamentals, the 24-hour transaction volume on the Bitcoin network is about $4.6 bln as of lately. In the market cap, $74 bln. That’s about 16 times multiple of the transaction volume for market cap. That’s very similar to MasterCard which does about $11 bln worth of transactions and it’s valued at about $180 bln. So, from a value perspective, its right there on par with MasterCard. Now, with that said, this is still a nascent technology. It’s only 10 years old but it’s been the best performing asset of the last ten years. It’s beaten bonds, stocks, currencies and comodities…”
Truly, not much has changed with Bitcoin for its value to drop so low. The fundamentals are there. The Bitcoin Cash mining diversification may have contributed to the drop in Bitcoin price giving some institutions the opportunity to buy low to be filled with high sell volume. The chaos surrounding its fork too may have affected other major cryptocurrencies to expose their lack of tangible value, earnings potential or asset backing leaving only their reaction to market sentiment and perceived utility. However, this drop is incomparable to the loss of almost $1 trillion recorded by Facebook, Apple, Amazon, Netflix and Google in the last 60 days since their 52-week highs which is more than all 2,000+ cryptos did throughout the year.
Pompliano adds that there’s been less involvement of institutional investors prior to 2018 and they believe that the work being done today is going to lay the groundwork for the price movement in the next two to four years.
The SEC has twice rejected proposals for bitcoin ETFs citing potential fraud as a continued concern but developments like the Swiss stock exchange listing crypto ETP and VanEck launching an OTC price index last week gives the hope of a better market. This is evident in the likes of Overstock’s e-commerce website announcing a total shift in its business model by planning to put its core online retail business on the block by going all-in on crypto by February.