As Bitcoin’s fantastic year comes to a close, the world is wondering what’s next for the cryptocurrency. Starting 2017 at just under $1000 per BTC, the coin’s value has since risen to roughly $16,000.
One investor seems to be pretty sure that Bitcoin’s ascent has just begun. CNBC reported on Thursday that a LedgerX user bought 275 call options that expire on December 28, 2018. At $3,600 a pop, that bet cost just $10,000 short of $1 million.
Since the trade grants the user the option to buy Bitcoin at $50,000, the better supposes that BTC will exceed that price by the end of next year. If BTC tokens fail to surpass $50,000 the money spent on the bet will be forfeited. Was this bet motivated by realistic expectations, or just FOMO (fear of missing out)?
Mike Novogratz: BTC Could “Easily” Hit $40,000 in 2018
In November, Ex-Fortress CEO Mike Novogratz made what turned out be a conservative prediction when he said that Bitcoin would reach $10,000 by the end of 2017. CNBC reported on Monday that Novogratz thinks that BTC could “easily” reach $40,000 by the end of 2018.
What would it take for a single Bitcoin to hit $50,000? At current valuation, a single BTC token would need to multiply three-fold. Bitcoin started 2017 at around $1000 a token; since then, it has increased to roughly $16,000, a sixteen-fold increase.
If BTC continues to grow at the same rate, a single BTC token will be worth $256,000 by the end of 2018. Certainly, then, a bet on Bitcoin reaching $50,000 by year end – though it may sound outrageous – isn’t all that unlikely.
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However, the continued failure to appropriately address some issues with the Bitcoin network may cause Bitcoin’s meteoric rise to become a bit more lethargic. Scalability on the BTC network has been a seemingly unsolvable problem; there are about a 100-times more transactions on the network today than there were at the beginning of 2017, and the network is under strain, with longer transaction confirmation times and higher fees to show for it.
On the other hand, the adoption of a functional solution could send the network even further than anticipated. For example, the Lightning Network (although still in its testing phase) recently proved its capabilities for interoperability. If implemented successfully, the Lightning Network could process BTC transactions instantaneously and with minimal fees.
High Profits and Practicalities
The Crypto Company CEO Mike Poutre believes that 2018 will be the year in which institutional investors really start to sink their teeth into BTC. In fact, it can be argued that this process has already begun with the appearance of more than a hundred crypto-based hedge funds in 2017 and the launch of Bitcoin futures trading on CBOE and CME.
Poutre told The Street: “Less volatility in Bitcoin will allow continued expansion in alternative cryptocurrencies. We will also see the rise of securities tokens in response to increased regulation. Conservatively, I predict the entire industry will reach a market cap of $5 trillion by the end of 2018.”
If Bitcoin does indeed manage to continue its upward journey, the global quest to regulate cryptocurrency and to tax profits made from owning and trading BTC and other kinds of cryptocurrency will only continue to intensify.
In the United States, the IRS began clamping down on crypto users when it demanded customer records from the popular Coinbase app. Governments around the world have been working to pass crypto-focused legislation; some have banned ICOs and crypto exchanges outright. Whatever happens in 2018, the crypto journey has really only just begun.
If you’re worried that it’s too late to jump on the Bitcoin train, have no fear. Heed the words of 18-year-old Erik Finman, a young man who invested some money given to him by his grandmother in 2011. The BTC tokens that he bought six years ago have since turned into millions of dollars’ worth of BTC. On CNBC’s Closing Bell, Finman merrily chimed: “It’s a wonderful time to buy Bitcoin.”