The number of bitcoin owners increased by around 41% over the last 12 months. However, October’s statistics indicate that the rate of growth is accelerating. If the increase in October is repeated every month for the next 12 months we could see 107% new users in 2018. The number of users now is considerably higher than one year ago. An increase of that magnitude over the next 12 months would be nearly impossible. There just aren’t enough bitcoins.

Please read the below, carefully and slowly in order to understand the logic behind this, and to see the conclusion.

If you liked this post and read this far, please use the word “hodl” in your comment and I will upvote you.

Statistics:

· There are around 5 million bitcoin addresses which contain more than $20 of bitcoin.
· There are around 4.5 billion adults on planet earth. (Thus only 1 bitcoin address for every 900 adults)

Most adults are too poor to invest. Only 22% have a net worth of more than $10’000. (Source Credit Suisse Wealth bands)

The number of people, (addresses), holding between 1.0 bitcoins and 2.0 bitcoin was as follows:

Date Number of addresses
· 19/9/2016: 134’791
· 19/9/2017: 190’292 +41.17%
· 19/10/17: 199’939 +5.06% (=+93% annualized)

The number of people (addresses) holding between 0.01 (about $60) bitcoins and 15 (about $90k) bitcoins was as follows:

Date Number of addresses
· 19/9/2016: 1’709’997
· 19/9/2017: 2’164’929 +26.6%
· 19/10/17: 2’300’710 +6.27% (=+107% annualized)

Supply

Number of bitcoins mined between 2016 and 2017: 650’000

Number to be mined in the next 12 months: 650’000

Demand

Net demand, (i.e. purchases less sales), from the latter group 2016 to 2017 was 454’932 bitcoin (i.e. 2’164’929-1’709’997). The remaining bitcoins mined were bought by larger investors.

Projected net demand from the latter group 2017 to 2018 = 2’300’710 X 107% = 2.46 million.

Let’s assume there are no large buyers (i.e. of more than 15 bitcoin), or that large buyers and sellers cancel each other out.

Then:

If everything were to remain constant, (i.e. price and growth rate), then demand, (at present prices), will exceed the supply by 1.8 million (2’460’000-650’000 = 1’810’000). Thus one of the following must happen:

1. Annual Growth rate must fall (e.g. because of government intervention) from the projected 107% to (650’000/2’300’710) = 28%, or….

2. Price must rise, so that buyers can only afford the 650’000 bitcoins. This would imply a future price of 1’810’000/650’000 X current price, or 2.7 X the price on 19/10/17. Or…..

3. More sellers appear, e.g. because of higher prices or enforced sales due to regulations and controls…. or.

4. Technical problems prevent buyers (e.g. closure of exchanges), or it becomes more difficult to buy. (too much effort required).