Bitcoin: Next year’s supply and demand equation. Next year’s bitcoin price could be $13’200, or $52’000 or $98’630.

in #bitcoin5 years ago (edited)

The demand for bitcoin from new first time users will be 6.6 million bitcoins over the next 12 months.

The newly mined supply will be 0.6 million bitcoins.

Existing bitcoin holders will be willing to sell 1.4 million coins over the next 12 months.

Thus demand will exceed supply by 4 million coins.

The above calculations assume a bitcoin price of usd 4’000.

At a higher price, demand for new coins, (not new bitcoin users), will drop pro-rata to the price change.

Seller supply will be rather inflexible. It won’t increase much even if the price rises alot.

Possible price predictions.

Anything mentioning a price is just a guess. It may be wrong. If you hear a tip on a horse, how much would you bet? It might fall at the first post. The bitcoin price may go to zero.

conclusion of supply and demand mismatch

Therefore demand for new coins has to decrease from 6.6 million to 2 million. That will only happen if the price is 3.3 times higher than now. I.e. $13’200.

The above figures assume that growth in new bitcoin users over the next 12 months will be the same as the last 12 months, i.e. 43% growth in new users with meaningful balances of more than $10. However we are probably under-estimating the growth in new bitcoin investors.

Less than 0.25% of the adult population actually own any meaningful (above $10) amount of bitcoin. Last year the growth was accelerating from the year before and there are several reasons to think that will continue.

If the number of bitcoin owners was to rise to say 1% of the adult population - from below 0.25%, then we would be looking at new demand of at least 26 million coins at present prices. Clearly that’s impossible to fill, as the total future supply can never exceed 21million. Therefore the price has to move higher.

To reduce the demand from 26 million coins to the available supply of 2 million (0.6 million newly mined, and 1.4 million of coins sold by existing investors), we would need the price to rise 13 times to $52’000 per bitcoin.

The above article uses sources and research from my earlier article If you would like to understand the source of any of the above numbers, then please read that article.


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Interesting approach to getting an idea about future price.

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