On the other hand, another model shows Bitcoin prices to dip 3x from the current price

Image source: pixabay -Hans

The only way to objectively look at Bitcoin price forecast is to weigh multiple scenarios that could happen in the crypto market. An article on Forbes - Panos Mourdoukoutas shows the two possibilities of Bitcoin's volatile market movements for 2020. As long as you are not performing short-term trading, these predictions apply to long term investors looking to understand the coin market.

Panos Mourdoukoutas together with his student, Greg Giordano ran two econometric models, the Haye's model and Wheatley models. The Haye's model was first reported in 2015 by Adam Hayes from the New School for Social Research in New York. Whereas Spencer Wheatley recently published their model in March 2018.

Haye's model is a cost of production model for Bitcoin, where the computational effort to mine Bitcoin is evaluated. A block of Bitcoin is added every 10 minutes, and the difficulty of the algorithm is adjusted/increased to hold that constant. Block rewards are distributed to miners, but rewards are halved every four years. Currently block rewards are 12.5 BTC and will halve to become 6.25 in 2020. The last important ongoing factor is electricity consumption for ASICs mining to remain low and sufficiently profitable for mining.

Based on the above mentioned factors, Haye's model can be projected with an increasing difficulty at a modest 7% monthly rate (rate for last two years was 14% monthly see bitcoinwisdom.com). Assuming eventual tapering of difficulty as reaching the Bitcoin limit, a $55,931.60 price tag is given to Bitcoin at Year 2020. This a supply-based calculation prediction that focuses on the ever expanding adoption of Bitcoin. Many countries are not slowing down to become the top Bitcoin-friendly cities in the world.

"The speculative and money-like properties of bitcoin, as a means of exchange and a potential store of value, add a subjective portion to any objective attempt at forming an intrinsic value. New and innovative uses of the bitcoin network for non-bitcoin specific applications are also likely to add value for mining."
(Hayes, 2015)

Image source: pixabay - Uki_71

On the other hand, Wheatley's model is a diagnostic for Bitcoin bubbles, to account for imminent bubble bursts and crashes due to increasing market instability. The number of active Bitcoin users, estimated based on the total number of active Bitcoin addresses, is the basis of the network. User activity can be affected by the current market prices and hence the demand for Bitcoin.

This is essentially a rate-limiting model, as data from 2012 to 2018 projects a decreasing annual growth rate from 35% to 21% and hence expecting active users to grow from 0.79M users to 2.6M (5-8% S.E.) in 2023 (Wheatley et al, 2018). Considering bubbles to be the result of unsustainable growth, the model projected with a limiting monthly rate of increase at 2% would put Bitcoin prices at $2,352.03 in Year 2020.

Greg pointed out a few caveats of Wheatley's model, where Bitcoin is given a lower value and conservative assumptions of the Bitcoin market cap at $20 billion, while the actual market cap today is $130 billion. Network demand is as unpredictable as the market price itself. The estimates from Wheatley's model is still a good gauge for dwindling user demand and hence what the price would be when Bitcoin ceases to intrigue the general population. I would personally say that the chances for such a phenomenon may be less likely than the opposing trend.

Image source: pixabay - geralt

Overall if the two models represent best and worst case scenarios for Bitcoin prices in 2020, we could remain slightly optimistic. At the approximate current market price of $7000, Bitcoin is showing potential to growth up to 8 times as compared to a dip 3 times the current price. Steven Russo, Executive Vice President of Kripti, is definitely taking the risk for a bullish future:

"Bitcoin is unquestionably still in its' infancy and requires additional time for it to mature. It is going to happen, and there is still money to be made for those that have the heart, the stomach, and patience. It is not unreasonable to think that returns could be 3x to 5x over the next five years.”
Source: Forbes - Panos Mourdoukoutas

-tysler