Bitcoin has been exploding in 2021, and if the past is any sign, we should expect it to continue all the way to $200,000 this year.
While skeptics will say that Bitcoin is nothing more than a bubble. And to be fair to them, it is certainly hard to see something skyrocketing as Bitcoin has done as anything other than a bubble. But the one thing that makes the difference is: Supply is programmatic.
The protocol itself is programmed to issue coins, making price a function of demand, since there is no change in the supply. This is a huge change in monetary economics, and is a concept not even understood by even so-called “experts.”
Every 210,000 or so blocks, or around four years, the protocol has what is termed a “Halving,” where new coins put into circulation is lowered by 50 percent. This event creates a disruption in the supply.
What is new about this current Halving cycle is the ongoing debasement in the legacy monetary system. Central banks, like the Federal Reserve have put themselves into a corner. After decades of interest rate decreases to boost markets, rates are frozen at zero, leaving them without a key tool.
Quantitative easing on a large scale to aid global credit and stock markets, which has also given rocket fuel to bitcoin. Recent announcements from the Fed have shown that they are committed to continue this policy.
Meanwhile, institutional investment into bitcoin has exploded. And this new demand will have to adapt to a tiny pinhole of possible supply, which will end in a skyrocketing of bitcoin value, as bitcoin transforms from an individual asset, into a global monetary asset with geopolitical influence.
A $200,000 bitcoin would be a $3.7 trillion dollar asset, just a fraction of the gold market.
While nothing is guaranteed, it is a good bet that governments will continue printing money and that the Bitcoin network will attract more people as more rational investors realize that a system of rules is better than to a system of rulers.
Thus, with these factors going on, $200,000 bitcoin is not just in the cards, it is highly likely.
Author: Steven Sinclaire