Why it’s Still Too Soon for Bitcoin to Moon and What’s Likely to Happen Instead (backed by Math)
I don’t really want to be a downer on this subject, but bitcoin isn’t ready yet. I keep hearing that bitcoin has reached the bottom and that we can soon see it shoot to the moon. I believe that it will someday within the next several years (the next attempt at a moon cycle is a little under two years from now by my estimates).
Bitcoin isn’t like commodities markets where the value is in the thing being bought and sold. It is instead the instrument that facilitates buying and selling itself. For that reason bitcoin and other crypto’s are attempting to become a replacement for the banking system. For those who are willing to become completely responsible for their own financial security, it is a far better solution than the banking system which makes civil asset forfeiture nearly impossible. For much of humanity (at least 3 billion people) that have been excluded by KYC (Know Your Customer) and AML (Anti Money Laundering), it is the only choice possible.
We saw an attempt at mass adoption of bitcoin last year. It failed not because of lack of interest, but because it couldn’t scale. In December 2017 when bitcoin peaked just shy of $20K, everybody was complaining about the $100 transaction fees (the spring before that it was less than a dollar). It literally buckled from the strain of all the new users and many of them only had Coinbase accounts without a hardware wallet. Some in the bitcoin community saw this problem coming, and there was a civil war brewing by 2016 over how to scale bitcoin.
This is because within the span of 10 minutes only about 3000 transactions could fit on a single 1 MB block. Some of those problems were solved and the network does have significantly more capacity now. Since segwit and other space saving technologies have been implemented, at least twice as many transactions can currently be fit on a block now. This means that BTC can probably go to about $40K before we reach $100 transaction fees again. But mathematically speaking, there’s no reason why bitcoin couldn’t reach the $1 million USD point (as John McAfee predicted), especially if the USD is heavily devalued due to hyperinflation.
I made a prediction last year based upon my software Delphic Oracle, that by February 2018 up through Feb 2019 we would be in a bear market. The astrological symbolism is associated with the 8th house (death) and the equally debilitating condition of the ruler of the times (Jupiter under the beams of the Sun and in fall). I don’t believe that the stars are efficient causes, but this works because all life follows predictable patterns (albeit usually very complicated patterns that look like white noise). The mistake many scientists make is in assuming that these patterns are just “white noise” and nothing more.
One of the cycles that astrologers are familiar with is the Jupiter / Saturn synodic cycle. It is known as a generational cycle in that nature symbolically turns the page in expiring the ideals of an older generation to make way for the new. While this happens gradually, the argument is that there are perceptible “jumps” in zero years (1940, 1960, 1980, 2000 and again in 2020). This cycle is also known as the “presidential death cycle” where presidents who take their oath in zero years die before the end of their term. Of course this hasn’t always panned out statistically. One should also note deaths in non zero years as well to find the variance in the chi-square to establish a baseline expectation. It is also known as Tecumseh’s curse.
Markets similarly follow a pattern which is why technical analysis falls in a very similar category. @tonevays thinks that the bitcoin bear market will be over by the last quarter of 2019 (his most pessimistic time prediction). This lines up rather well from my own expectations based upon this historical cycle and the method of zodiacal releasing.
What this method cannot do is forecast an actual price. This comes from rational educated guesses based upon past market performance. We see the parabolic curve in fall of 2017 as a repeat of what happened in late 2013 - early 2014. The halving of the block reward in summer 2020 is an efficient cause that can mean the increase in value. These factors seem to converge showing that the next attempt at adoption for bitcoin will happen between late 2019 up until early 2021 with the last half of 2020 being the most likely apex of the next parabolic curve.
The question is will bitcoin have solved its scaling issues? Lightning Network hasn’t been released in a way that would be of any help to non technical users. Until this issue is resolved, bitcoin will just hit the wall again, but at a higher price, then start laddering down the same way that the first half of 2018 has done. The only difference would be at a higher price range (probably somewhere between $20K and $40K).
However, what if the public comes to realize that some crypto’s have already solved the scaling issue? I am aware of three projects that have already done this (EOS, Steem and Bitshares). The issue here isn’t whether they can handle Visa scale transaction times, but whether they are decentralized enough. If one of these currencies becomes the next financial instrument in the next Moon cycle, the most likely damper will come from government regulators.
So what's the math here? I think that as long as the technology can scale enough to handle the load, it will probably achieve equality with the world's banking system in handling transactions (half banking and half crypto). So what market cap is the banking system handling world wide? Divide that in half, then divide in half again. I think that 20 Trillion USD would be a very conservative estimate. If current bitcoin dominance is still in the 50% range, that would give bitcoin a market cap of 10 trillion USD. If that happens, the value of bitcoin will be 10 T / 17.5 million = $571,428 USD. Suddenly John McAfee doesn't look so crazy anymore.
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Honestly I was kinda happy about segwit 2x but really sad on how the way it was done. In order for the Bitcoin LN to support the world-it would need 16 MB block limit with segwit so it would be 32 MB blocks. There is a way to scale Bitcoin to meet the 16 MB demand without using a 16 MB blocklimit and no softfork is to use Lumino protocol. And that reduces privacy of Bitcoin txs. https://www.coindesk.com/lumino-bitcoin-lightning-network-scaling-sidechain/
But then again having 16 MB might not be needed bc we did not get world adoption...
The other solution to have less block size is using altcoins and topping bitcoin LN channels.
I still think the LN is the future and there are many ways to scale Bitcoin without hardforks. Only time can tell...
When (or at what price) do you think would be good to buy Bitcoin?
I do want to get some, as I realize that the 21 million cap will for sure mean it will be quite scarce a few years down the line. And that in itself will be monumental (plus the fact that most coins are in the billions of units).
I don't want to be in the business of giving financial advice, but I'll tell you what I believe might happen. I'm about 90% certain that we'll see BTC below $5K before this bear market is over and about 50/50 on whether we'll see below $3K. A few bears are even predicting as low as $1K, but I think that is unlikely. If that was to happen, it would most likely be a flash crash.
The general approach the pro's use is to ladder in buys on the way down and increase the buy size the lower it goes. Proceed at your own risk...
Isn't Ethereum supposed to implement both Plasma and Shard scaling solutions by 2020? We've also been promised SMTs early 2019, so if there is a problem with that... and their often is, that could also be pushed back to near 2020.
2020 is looking like an interesting year. I mean just look at it! Two twenties in a row :D
In addition, prices might not go up much for a while, but they also might not go down much either. We can always hope for the market to trade sideways for a while.
The most pessimistic target I've seen is $1000 / BTC. Most bears are predicting that it will come down into the 3K range. I'm personally about 90% certain that we will see below 5K before this bear market is over. Tone says that he will know when we've hit bottom when someone like Tim Draper "rage quits" on bitcoin.
Ah you know I was looking for some evidence from the 2013 pump and dump to contradict you, but we are at the baseline right now... and the despair dump of 2014 went to about half the baseline, so 3000 could be spot on.
Then again, perhaps Bitcoin has lost a little volatility. We also don't have a Mt. Gox issue to deal with.
I want Craig Wright to rage quit already
Plasma is so sad...
It just a glorfied drivechain sidechain-ok a little exaggeration. And it technically already out aka loom network. Sharding is sad...
It basically splitting the chain in pools and with this split you split the network security. Hence Eth plan to POS. POS gives the same security to each pool aka shard of the network. This might ruin the decentralization.
Also Eth POS aka casper deletes coins if they fall out of favor.
I worry that the main part of crypto decentralization will disappear. Of course it way more decentralized than the current system but still....
My worry is if EOS or Steem takes over as the main medium of exchange, how easy will it be for 21 block producers to be taken over by the US government? As it is now, they could care less, but we'll see if real money ends up on the table.
Complete agree-21 risk points. Actually they just need more than half. And I hate it when they say-oh we'll just unvote them. What if they are forced to work for the bid for the government? They won't tell you. And worse they might be secret government supporters and that would hurt even worse
The government could easily dump several billion in to upvote 15 of their own block producers if the existing block producers can't be bought off. Then they can proceed to create a technical tax leech on the EOS system by various methods.
You mean the current amount to run a EOS Dapp isn't enough already? I like how the narrative changed to being the best Dapp platform to the one where only commercial Dapps will run
Sure, a lot of the tech will over-hype and under-deliver, but the cryptosphere as a whole is running in every direction at once. There are a lot of walls, but if even one chain escapes this hellhole economy we all win.
+1
This is kind of what Patrick saw too, though, he saw something different for DogeCoin and thinks it will moon in Dec and then kind of drop off the map a short while later. Needless to say, it is cheap enough right now that we invested in some! It will be interesting to see what happens!