Post
Topic
Board Speculation
Re: $10,000 when?
by
dinofelis
on 19/11/2014, 20:46:32 UTC
When considering if/when bitcoin price will hit $10,000 per coin remember:

Presently 3,600 coins are created each day.
At the current price of $375 per coin, that's $1.35M of additional supply created daily and $493M of additional supply created yearly.
The amount of demand coming in has been less than "Existing Supply" + "New Supply" so the price has been going down.

If bitcoin was to reach $10,000 per coin before the next halving.  (Currently estimated to occur 2016-07-31)  http://bitcoinclock.com/
The amount of new supply created would be:
Daily = $36 Million
Yearly = $493 Billion

Its not going to happen.  

You can have an idea what are the conditions for bitcoin to reach $10,000.- per coin.  
If you consider bitcoin as a monetary unit, then it would mean a market cap of $150 billion grossly, which represents about 3% of the market cap of USD (M2 money).  That's not an unreasonable target for bitcoin to reach 3% of the US money market.
It is about a third of the illegal drugs market worldwide.

You can also see it otherwise.  $150 billion is about 2% of the gold market cap.

I think you made a slight mistake in your calculation: 36 million per day means 13 billion per year, not 493.  The inflation rate today is somewhat less than 10% per year.  That is still problematic as it is still much higher than the monetary inflation of most big fiat currencies: for the moment, it is bitcoin which is by large the most inflated currency.

So if bitcoin becomes a success on the few percent level in the gold market or the money market, $10 000, - is reasonable.

On the other hand, you do not do that overnight.  In order for 3% of the US economy to be paid in bitcoin, will take a certain time.  And it has to be really in bitcoin, not just "using bitcoin a few hours between buying the coins, spending them, and the merchand trading them back into fiat".
It means: being paid in bitcoin each month, keeping bitcoin as one's salary, and spending it at the groceries.

Not yet.  But if bitcoin is to become somewhat of a monetary success, a few percent of the market would be the minimum one would expect, no ?

On the other hand, a surge to $10,000.- cannot be stable if the fundamentals (a few percent of the gold share, a few percent of the US economy) are not there, or are not in sight.  So that is not sustainable.  If ever there is a pump to $10.000,- it will for sure be followed by a huge crash.   But, apart from a massive market manipulation, I wonder who would be the idiots to buy at $10.000,- in the coming years.  Or even to buy at a few $1000.- as long as a single percent of the market share is not in sight.