Exponential curve fit to Bitcoin -- 11 days later

In my last post I estimated what would be the price of a bitcoin 200 days hence, on May 14, 2018, by extending an exponential curve fit to the previous 200 day's closing price: $85,716.

But Bitcoin has exploded in price since then, prompting me to update my estimate. Using the same tools described in that post, here is the latest exponential curve fit and graph:

price = 2040 + 353 * exp(0.0159 * day)

In 200 days from now, on May 25, 2018, Bitcoin might have a price of $205,809, which may be conservative considering that the latest points are outliers. In other words, an exponential function is not a good fit anymore because the price is accelerating even faster than an exponential curve, during the last 11 days.

Normally, in any biological or economic system this would be a red flag, because nothing grows even merely exponentially indefinitely. All such systems have a hard limit. For example, a virus might multiply exponentially until there are no hosts left in the population. In the case of Bitcoin, I suggested in this post that a hard limit might be the GWP or Gross World Product which corresponds to a bitcoin price of roughly $5 million. At that time, we were 64% of the way there on a logarithmic scale. Less than two weeks later we are already at 67%, using the current price of $15,300, up $1000 from yesterday's close.

Having studied bubbles for decades, I find the Bitcoin phenomenon most fascinating. It has already far surpassed all historical bubbles and shows no sign of popping just yet. I interpret this to mean that human nature has not changed one bit since the tulip mania (predominantly driven by fear and greed, not rationality) but for the first time, this bubble could possibly draw in billions of people from all over the world, thus amplifying the consequences like never before. And probably no object of speculation ever has had less connection with anything tangible, making Bitcoin the most fertile ground ever for speculators -- they don't need to ignore reality checks because there aren't any, at least until the virus consumes the host.

Peter Schiff argues that the idea that people are buying cryptos because they are fleeing fiat currencies because they no longer trust them can't be true. Although some of the original Bitcoin advocates did have this motivation, if most buyers today were like them then they would also be moving into safe havens in general (like gold) and getting out of not only fiat but anything like it (such as bonds). But they are not. Rather, they are clearly chasing anything going up, like overvalued stocks and overvalued real estate.

What used to be thought of as potential hazards for Bitcoin, like hard forks and hacks, are now brushed aside or even seen as positives, like the imminent appearance of Bitcoin futures trading on the CME on December 18, which was fast-tracked by the regulatory agency. Why do you think they expedited this, when it has been proven that the banks/government have successfully suppressed the gold price for over six years using "paper gold" futures? Could it be that they see Bitcoin as a greater threat even than gold? But Bitcoin advocates see this development as a sign of mainstream acceptance and legitimacy rather than as a concern.

And the promised utility of Bitcoin, namely a fast, low-fee and secure medium of exchange outside the control of central authorities has already faded, to the point where advocates are no longer promoting Bitcoin as a currency but as "digital gold," a virtual asset. But it is not digital gold, nothing like Goldmoney, which actually allows free transfer of vaulted, allocated gold bullion (and Bitcoin, for that matter) to other Goldmoney accounts, and allows spending gold using a Visa card. No, digital gold is not what speculators want.

Bitcoin skyrocketed yesterday despite a $64 million hack and the Korean PM fearing "serious pathological phenomena". Mania might be too mild; serious pathological phenomenon does seem more accurate.

Just remember that fear is stronger than greed, and that the bigger it is the harder it falls. But perhaps Bitcoin will spread to other planets and become the most prized virtual asset in the Galaxy, or even the Universe. Then, your single bitcoin might buy a whole planet, a planetary system or perhaps even a galactic cluster, not merely a tropical island. And the energy required to mine that bitcoin might have consumed a supernova's energy release, thus justifying its value in the minds of some, even though that energy would no longer be usable. So speculators, place your bets! (And now with futures you can also bet against Bitcoin, but I wouldn't advise it.)