Thread by @caprioleio

My #Bitcoin Forecast

🚀Bitcoin $100K within 5 years

Based on a conservative estimate of Bitcoin’s Energy Value, it is likely that $BTC will 𝟭𝟬𝗫 within the next 5 years.

A thread forecasting Bitcoin’s long-term price using Energy Value.

1/n

𝗔𝗽𝗽𝗿𝗼𝗮𝗰𝗵

Bitcoin’s Energy Value has tracked Bitcoin’s price for the last 10 years.

Let’s use it to forecast price.

There are only two varying inputs in Energy Value:
⚡️Hash Rate
⚙️Mining Hardware efficiency

We can forecast each of these to predict BTC's Price.

2/n

⚡️Hash Rate

Over the last 5yrs, Bitcoin’s HR has grown exponentially (linear on a log scale).

Assuming this relationship holds, but allowing for some market saturation, we can estimate that the HR growth rate drops from ~135% p.a. today to ~20% p.a. in 2025.

3/n

⚙️Mining Hardware efficiency

Energy efficiency has also improved exponentially.

But the annual rate of improvement has fallen from over 400% in 2015 to 50% last year.

I expect this trend of declining improvement will continue.

4/n

𝗧𝗵𝗲 𝗙𝗼𝗿𝗲𝗰𝗮𝘀𝘁

Combining these estimates for HR and Efficiency, Bitcoin’s Energy Value should reach $𝟭𝟬𝟬𝗞 by 2025.

🧠 Sanity check: $100K Bitcoin = 1.8T market cap.
✅That's just 20% Gold’s market cap

5/n

𝗠𝗿 𝗠𝗮𝗿𝗸𝗲𝘁

So far, we have only looked at fair value.

As always, price fluctuates around value.

Bitcoin’s Price has deviated to as low as -70% discount to Energy Value, to as high as a +600% premium.

If this cycle repeats, BTC could see prices as high as $600K+.

6/n

𝟮𝗫 𝗙𝗮𝗶𝗿 𝗩𝗮𝗹𝘂𝗲?

While 6X fair value is a possibility, excessive swings will become more difficult with time due to the law of large numbers.

For the coming market cycle, I expect 2X fair value is definitely within the realm of possible.

7/n

Where will this money come from?

Supply Falling:

👇40% of BTC is locked in wallets that have not moved their coin in >2 yrs.

👇Bitcoin Inflation rate to halve in May & again in 4 years.

BTC will be the lowest inflation asset ever known to man

Note: HODL Wave pattern👀

8/n

Demand growing:
☝️@Glassnode number of entities ATH
☝️New onramps: VAR management now possible w/ options. Prev. Bitcoin’s volatility blocked access to institutions
☝️Bitcoin up 100% in 2019, yet no growth in Google searches
☝️Number of 1+ BTC addresses ATH
☝️it's a QE hedge

9/n

@glassnode 𝗪𝗵𝗮𝘁 𝗮𝗯𝗼𝘂𝘁 𝗘𝗹𝗲𝗰𝘁𝗿𝗶𝗰𝗶𝘁𝘆 ⚡?

BTC uses ~0.3% of global elec.

With continued improvements in Energy Efficiency, $100K BTC will likely consume just 3X current energy.

A BTC market cap of $1.8T - 8T (=gold) could consume less than 1.5% of the world’s power.

10/n

@glassnode 𝗡𝗼𝘁𝗲 𝟭

Because the HR forecast is below the historic trendline, and the efficiency forecast is above the trendline, both forecasts can be considered historically conservative.

--> $100K Energy Value is conservative.

11/n

@glassnode 𝗡𝗼𝘁𝗲 𝟮

The ASIC chips caused a step-change improvement in Energy Efficiency in 2013/14, dropping Bitcoin’s Energy Value.

Should such an event occur again in the next 5 years (eg. Quantum computing), this would cause a 1-for-1 drop in predicted Energy Value.

12/n

@glassnode 𝗡𝗼𝘁𝗲 𝟯

Perhaps the 2 most critical risks to Bitcoin's future are:

1️⃣ Quantum Computing: breaking SHA-256 algorithm / accessing lost coins

2️⃣Government outlaw: while decreasing with time, major economic outlawing of BTC would curtail mass adoption and Energy Value

13/n

@glassnode 𝗖𝗼𝗻𝗰𝗹𝘂𝘀𝗶𝗼𝗻

This forecast should be considered a “base case”.
All forecasts are wrong, some are useful.

I expect Bitcoin will hit at least $100,000 within 5yrs.

Based on historic BTC fundamentals, growth rates and market cycles this is a conservative estimate.

14/n

@glassnode 𝗙𝗶𝗻𝗮𝗹 𝗧𝗵𝗼𝘂𝗴𝗵𝘁𝘀

Risks considered, Bitcoin is an attractive investment.

Each generation has a "once in a lifetime" opportunity.

Bitcoin was the best performing asset of the last 10yrs.

There are plenty of reasons to think the next 5 will be no different.

15/15