The problem with Bitcoin is the only thing keeping the dollar afloat is irrationality, and the market can stay irrational longer than you can stay liquid.
— Alrenous (@Alrenous) December 15, 2017
I don’t write as much about Bitcoin anymore, because it’s too volatile and the majority of people who are buying Bitcoin now are chasing price momentum and will be burned when it drops big time (and it surely will), so it would be in bad faith to encourage people to engage in such speculation when they lack the psychological disposition to tolerate large, sudden losses.
But right off the bat, Bitcoin is not going to be money (in the same way the US dollar is money), it’s not going to revolutionize commence, I don’t think blockchain technology is that big of a deal (all it is is an online public ledger), and the US dollar is not a ‘bubble’. As discussed earlier (when Bitcoin was only at $2,000), Bitcoin is much closer to being a commodity, such as gold, than a currency.
Bitcoin is too hard to use, too prone to wallet theft and hacking in part due to to stolen funds being irrecoverable, too much volatility relative to the US dollar, the fees are too high, there is no buyer protection, and worst of all, one much convert their fiat into Bitcoin to spend Bitcoin, which defeats the point of it being a standalone currency.
In May 2017, when Bitcoin was at $1,700, I predicted it would go to $20,000, which it came within a hair of hitting last week. It has since pulled back to $16,000-$17,000. If one includes the Bitcoin Cash and Gold spin-offs, the $20,000 target has been surpassed by about $1,500, so I was right again. My target having been hit, I have since begun to sell some of my holdings to buy back in should Bitcoin fall 75% or more.
Despite these downside risks, how high can Bitcoin go? The sum of the parts cannot exceed the whole. The upper theoretical limit of Bitcoin is likely the same as the total value of all mined gold in existence, or about $7-10 trillion, and then you can add about 3-5% a year on top of that for inflation effects. But the odds of that happening are slim.