Attempting to predict the bitcoin cycle (follow-up)

Attempting to predict the bitcoin cycle (follow-up)

I follow up on my previous post about the price of bitcoin following halving.

The capitalization is easy to determine: just multiply the number of bitcoins in circulation by their price. This capitalization at the peak of the three 1-1.5 year bubbles following the first three halvings of bitcoin was multiplied by about 100: from $13bn to $1.1trn. To put this in perspective: currently, the global value of gold is about $10trn, money (M2) about $80trn, stocks about $100trn and bonds about $100trn.

To me, over time, bitcoin will continue to attract capital from other sources for the same reason that gold did until the early 20th century. Of course, no one can predict the rate at which this movement of capital will occur. And this assumption may be wrong.

Let's assume that the history of the first three halvings is repeated in 2024 and that a bubble is recreated as a result of this fourth halving. At the time of this fourth halving, there will be 19.7m bitcoins in circulation. Currently the capitalization of bitcoin is $380bn. Here are some scenarios for early 2025:

– a government or other body manages to compromise the bitcoin network or another technology superior to bitcoin emerges: market cap $200bn, bitcoin price $10,000.

– the bubble capital of the third halving "returns" to bitcoin in early 2025: market cap $1.1trn, bitcoin price $55,900.

– the trend of the previous three halvings continues. $900bn is added to the $1.1trn as it occurred between the 2nd and 3rd halving: market cap $2trn, bitcoin price $101,000.

The aim of these scenarios is not to accurately forecast the price of bitcoin in two years, which is a fool's errand anyway. It is rather about thinking: what needs to happen within 2 years for the price to be x? Given the current value of bitcoin, especially the latter scenario may seem extravagant. But on a global scale, $2trn simply means that a small percentage of capital currently in cash, stocks or bonds is transferred into bitcoin.

Interested to hear your comments.

submitted by /u/Karl_Sigmundsson_
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