No prediction about Bitcoin is reliable

Over the years, one can count far more than one prediction about Bitcoin that has turned out to be correct. 

However, there are many more that have turned out to be wrong instead. 

The most famous prediction about Bitcoin

Perhaps the most famous prediction of all in recent years was that of PlanB. 

Using a model based on the stock-to-flow (S2F) ratio, PlanB already hypothesized before 2020 that the price of Bitcoin during the post-halving bull run would exceed $100,000. 

To date, all three halvings of Bitcoin have been followed by a big bull run the following year. Indeed, by a truly huge speculative bubble. 

In analyzing the historical graph of BTC’s price on a logarithmic scale, PlanB had noticed that there was a basic trend, which over the years had always been respected, up to 2021, despite large swings above and below its line. 

The projection of this trend into the future led him to assume that the next price level reached during the last major bull run was above $100,000. 

Actually, 2021 had started very well, perhaps even too well, with respect to the trend indicated by PlanB. 

As early as April the price had risen above $60,000. But the following month China issued the final ban on crypto trading, and this caused Chinese capital to come up short for the second bullrun of 2021, the one from July through November. 

In fact, in November it came close to $70,000, but never approached $100,000, making it clear that PlanB’s prediction was in fact incorrect. 

Bitcoin (BTC): the next prediction

Comparing several different predictions made by many financial market experts, the average indicates that by the end of the year the price of Bitcoin may return above $40,000. 

By now PlanB’s prediction is outdated, not least because his S2F model would indicate for the next big bullrun a reference levels of $1,000,000, which to date is arguably impossible to reach in such a short time. 

But there are many who believe that there is still room for a significant price increase before the next halving, which will occur in the spring of 2024. 

However, it is by no means certain that even if the latter prediction eventually comes true, it would do so linearly with a slow rise from the current level. On the contrary, it is much more likely that it will go on in swings, some upward and some downward. 

Moreover, like all other predictions, even this one is not to be considered reliable until proven otherwise, rather these are only hypotheses based on more or less in-depth analysis, comparisons with the past, and future projections. 

The long-term prediction

However, the discourse changes if instead of focusing on the short or medium term we go much further in time. 

Indeed, it now seems well established that liquidity in the financial markets affects the price of Bitcoin. 

In particular, when large central banks flood the markets with large amounts of money created out of thin air they “inflate” the prices of many financial assets, including Bitcoin. 

For example, between 2020 and 2021, the Fed carried out the largest quantitative easing (QE) campaign in its history, in absolute values, creating more than $4 trillion out of thin air, out of the less than $5 trillion that existed in 2019. 

It is very likely that this initiative ended up driving up the price of Bitcoin, as it did for many other assets as well. 

It is no coincidence that the all-time all-time high of the US exchanges was reached between December 2021 and January 2022, while that of BTC occurred only the month before. 

Therefore in the event that in the long run there are other similar campaigns of such proportions, it is entirely possible that the price of Bitcoin could rise again, also because with Bitcoin it is not possible to create large amounts of BTC out of thin air. 

To date, only 6.25 are created every 10 minutes or so, and with each halving this figure is cut in half. Currently 19.4 million BTC have already been created, and no more than 21 million will ever be created. 

Despite this, it is still not possible to accurately predict the future price of Bitcoin, even in the long run. 

The obstacles to the predictions

There are many reasons for this. 

First, no one knows what the monetary policy of major central banks will be in the future. 

Even though it is possible to imagine new QE measures, no one knows neither how many there will be, nor how long they will go on, nor, most importantly, how much fiat money created out of thin air will be injected into the markets. 

This uncertainty alone makes it absolutely impossible to accurately predict what the price of Bitcoin will be in the long run. 

There is also another big problem: the supply of new BTC is scarce, and it will get increasingly scarce, but no one knows what the demand will be. 

The price is the result of the interaction of demand with supply, so in the unfortunate event that demand decreases more than supply, the price could also go down. 

Then it is also necessary to take into account the possibility that perhaps technical problems may pop up in the future that undermine its operation. 

To date this actually seems a very remote possibility, more theoretical than realistic, but ten or twenty years from now it is difficult to imagine what the technological picture will be. 

Moreover, there is also another theoretical hypothesis to be considered. In fact, it cannot be ruled out a priori that sooner or later a Bitcoin competitor may not pop up to drain demand for it. To date this also seems to be only a theoretical hypothesis, and not a realistic one, but the concept always applies that it is difficult what could happen decades from now. 

So the predictions are there, and surely some will turn out to be correct. But to date it seems impossible to say for sure which one.