Saturday , 23 October 2021

Bitcoin Is Going To $500,000 and the Rationale Is Simple

…While our year-end price target for Bitcoin is $100,000, we believe that Bitcoin prices will soar much, much higher in the long run – like 5X higher. That’s right, we think Bitcoin is going to $500,000 and the rationale…is simple.

Bitcoin, in its most fundamental form, is the digital version of gold. The gold market is an $11 trillion market. If Bitcoin gets that big, you’re talking an $11 trillion market on 21 million tokens, which implies a price per token of about $500,000.

Of course, that back-of-the-envelope math rests on the huge assumption that Bitcoin is, indeed, the digital version of gold but it looks like that may already be the case. Just take a look at the chart below. The blue line tracks Bitcoin prices. The purple line tracks the 10-year Treasury yield, which is widely seen as the market’s dynamic proxy for inflation and the green line tracks the price of gold.

The blue and purple lines correlate strongly to one another but the green line doesn’t correlate to either…[and,] to us, it means that the market has already confirmed Bitcoin as the digital version of gold – and, indeed, as a superior version of gold.

Long story short, as inflation expectations rise, investors sell bonds, and the 10-year Treasury yield rises, too. To protect against that inflation, investors typically buy gold as a store of value, but this year, instead of buying gold, they’re buying Bitcoin.

Conclusion

Bitcoin has become the go-to hedge against inflation in 2021 – not gold… Fundamentally speaking, Bitcoin is better than gold.

Editor’s Note:  The original post by Luke Lango has been edited ([ ]) and abridged (…) above for the sake of clarity and brevity to ensure a fast and easy read.  The author’s views and conclusions are unaltered and no personal comments have been included to maintain the integrity of the original article.  Furthermore, the views, conclusions and any recommendations offered in this article are not to be construed as an endorsement of such by the editor. Also note that this complete paragraph must be included in any re-posting to avoid copyright infringement.

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