It’s easy to see the bitcoin price go up and feel like you’ve missed the boat. However, many individuals and institutions believe that Bitcoin is just now starting to heat up. So what is driving the price of bitcoin so high, and how could it continue to rise beyond these levels? The best place to start is by understanding the backbone of Bitcoin economics: supply and demand.
Supply And Demand
The problem with projecting future prices stems from the difficulty in predicting supply and demand. Bitcoin is unique in that its supply is on a known schedule; it is embedded in software code that cannot be changed by any person or organization. This code states that the new supply of bitcoin is cut in half every four years. The first mining subsidy halving occurred in 2012 when the new supply was cut in half to 25 coins released approximately every 10 minutes. In 2016, it was cut in half again, down to 12.5 new coins created every 10 minutes. In May 2020, the most recent Halving occurred, meaning there are now only 6.25 new coins created every 10 minutes. In short, the new incoming supply of Bitcoin becomes increasingly scarce as time goes on.
Let’s compare the mechanics of Bitcoin with something like the price of cars. If there’s a huge increase in demand for cars, there would initially be a shortage and the price would shoot up. However, the car producers can react by manufacturing more cars. Once this new supply of cars is available, the price will come back down.
Now, imagine what would happen if the new supply of cars was strictly limited: only 1,000 new cars could be created each year. There simply would not be enough cars to go around, so the price would go up (and not come back down). What if we go even further and cut the annual supply of new cars in half, so that only 500 new cars could be created each year? It may lead to a mania in the price of cars as people start to realize that owning a car is becoming increasingly difficult.
This upward price mania is effectively what happened to bitcoin in 2012 to 2013, 2016 to 2017, and thus far in 2020 to 2021. The supply of bitcoin stays constant for a four-year period. Then, all of a sudden, it is cut in half. The impact is small at first, but as more and more people learn about Bitcoin, there are an increasing number of buyers chasing a decreasing level of new supply.
The exponential growth of bitcoin’s price can be a bit hard to grasp, so let’s see what it looks like with charts. Here’s bitcoin from 2010 to 2014 with the exponential growth phase circled in red:
And here’s another chart showing bitcoin’s price from 2010 to 2018. Notice how the exponential price increase from 2013 (circled in red) now looks insignificant. The 2017 exponential growth phase is circled in blue:
Finally, here’s a chart that catches us up to today’s price levels. The current exponential price increase is circled in green, while the 2013 and 2017 price rises are circled in red and blue, respectively. Notice how the first rise is just a blip on the radar, and the second rise is also starting to look insignificant:
If the price of bitcoin follows its pattern following the previous supply halvings, the blue circle above will soon become almost as tiny as the red circle. This lines up with price predictions from many industry leaders: CitiBank projects the price of bitcoin will reach $318,000, Guggenheim says $400,000, JP Morgan claims $146,000 and the list goes on.
Isn’t This Too Good To Be True?
Bitcoin may feel too good to be true because it is such a unique opportunity. Almost every new technology is first available to the wealthy and well-connected before everyone else. Televisions, cars and computers were first owned by the ultra-wealthy, only later to be owned by the masses. Similarly, almost every new investment is first available to the top 1 percent. Most companies are first privately funded by venture capitalists and accredited investors, only later to become publicly available via the stock market.
Bitcoin reverses this trend. It can be acquired by anyone with an internet connection. In some ways, an average person can more easily store their wealth in bitcoin than Jeff Bezos can. While the average person can simply download an app and buy bitcoin, Bezos would likely require a direct relationship with a large bitcoin exchange, as well as a complex plan for securing hundreds of millions of dollars’ worth of bitcoin. While not fully available to all of humanity (not everyone has an internet connection), Bitcoin is the most widely available early stage technology in our lifetime, and perhaps in modern history.
Of course, Bitcoin is not a guaranteed success. In its early stages, the internet was not a guarantee, and neither was the printing press. However, Bitcoin’s globally decentralized nature makes it difficult to kill. It has no leader to attack or bribe. It is not a company that can get overleveraged and collapse. It is not reliant on a few key customers, and it cannot be disbanded simply because a world leader doesn’t like it. Bitcoin continues to exist because people and companies across the globe use it and work on it, 24/7, 365.
While global Bitcoin adoption is not a certainty, it is continuing to grow at an exponential pace, both in terms of price and number of users. The internet followed a similar path in its early days. At one point, fewer than 5 percent of people in the world had internet access. Because of these low ownership levels, the internet was slower and less useful than it is today. Currently, around 60 percent of the global population is an active internet user. Right now, global Bitcoin ownership covers less than 5 percent of the world’s population. If the global network effects that escalated the Internet to widespread adoption are similarly boosting Bitcoin toward global ownership, we are not too late to get into Bitcoin at all. In fact, we may still be very early.
This is a guest post by Mitch, founder of YourBitcoin.Expert. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.
MicroStrategy Keeps Buying The Dip – Spends Another $10 Million On Bitcoin
Everyone is acquiring bitcoin. From everyday people buying fractions of a bitcoin in the hopes of making a value later on to companies like Tesla padding their wallets with billions worth of the famous asset, bitcoin is all the rage these days.
Given that bitcoin currently hovers around $45,000 after seeing a new all-time price high of over $65,000 a few weeks ago, for some, now may be a desirable time to jump on the train.
One company that definitely got the memo was MicroStrategy as it was confirmed on May 18, 2021, that the company has bought another $10 million worth of bitcoin.
Bitcoin Whale MicroStrategy Keeps Buying
This latest purchase was confirmed by Michael Saylor, the founder, and CEO of MicroStrategy on Twitter. According to his tweet, MicroStrategy purchased an additional 229 bitcoins with each costing an average of $43,663. With this acquisition, the firm’s total bitcoin stash now comes to about 92,079 with an acquisition value of $2.251 billion. Acquired at an average price of $24,450 per bitcoin, this represents one of the biggest caches of bitcoin held by a single entity.
From the language used in the tweets, it is implied that the company intends to HODL long-term as do many private crypto holders who believe that bitcoin will be worth hundreds of thousands at some point in time. Regardless, it is clear that the corporate world is getting its fill of bitcoin and investing a significant amount of money in it.
It is safe to expect that other firms besides MicroStrategy will continue to pad their wallets with even more bitcoin and other cryptos, especially given that the market is not mooning at the moment.
At the same time, some analysts predict that the bitcoin price will reach $100,000 by the end of this year and some even predict $300,000 or 400,000 in a few years, and should this happen, it will be interesting to see at which price point firms like MicroStrategy will sell, if at all.
Marvel Icon Behind Batman, Green Lantern To Launch Exclusive Comic NFT Collection
The art world and the world of blockchain are currently seeing a huge intersection thanks to the rise of non-fungible tokens or NFTs as they are commonly called. Top artists from around the world have been selling their work as NFTs with millions of dollars being raised and NFT platforms seeing more attention from the artist themselves.
One of the latest of these is from Neal Adams, a legendary comic book artist behind iconic characters like the modern Batman and the Green lantern. It was announced on May 18, 2021, that the comic book artist will be partnering with Vorto Gaming to release an exclusive comic book and NFT collection.
Batman Immortalized as an NFT?
Some details about the new partnership have been announced such as Adams creating bespoke comic books around Hash Rush, which is the first title published by Vorto Gaming and will be released on its network. Part of this comic will involve new and existing Hash Rush characters and a new storyline from Adams.
Given that Adams has shaped storylines for a number of comics for DC Comics and Marvel, there is a lot of anticipation. He will receive help for this new project from Swedish-based ComicFirst Entertainment and their artist Mikael Bergkvist, who is also his mentee.
Adams himself has touched on the importance of gaming and why he is excited about this upcoming project.
“Gaming is without doubt the most innovative entertainment industry of the past decade and is shaping so many different aspects of our culture. We’re moving into a period in history where we are spending as much time exploring digital, imaginary worlds as we are living in this one. Comic books were always a transportation tool – taking us to another place, to experience another story, even just for a moment. Hash Rush is no different and I’m looking forward to sharing this story with the world.’ he said.
At this point, it seems that there is no limit to the type of content that can be created as an NFT. Artists from all sectors are beginning to explore their options with regards to both making money and providing valuable experiences for their fans. Hopefully, Adams’ participation in this project will lead to more prominent comic book artists embracing NFTs as well.
PARSIQ And Autonio Partnership Brings Smart Triggers To NIOX Trading Suite
PARSIQ has partnered with the Autonio Foundation to integrate its monitoring technology into Antonio’s NIOX trading suite.
As per the announcement, through this partnership, PARSIQ is planning to deploy its Smart Triggers technology into Autonio’s NIOX suites. The partnership will help Autonio monitor blockchain data for important events by integrating a few lines of code. Generally, this new integration will help save on the time and infrastructure required to create custom listeners.
Ali Raheman, Autonio Foundation CEO and Founder.
“PARSIQ enables us to secure our governance and our DAO along with granting our users access to info about asset movements, which is a higher up priority for us, while we begin incorporating notifications and triggers into our trading solutions and tracking. Use for AI is longer term. PARSIQ has provided us with a toolset to make improvements in 3 major areas, trading, governance, and analytics data for AI.”
Tom Tirman, CEO of PARSIQ.
“Automated trading tools are a natural use case for PARSIQ’s Smart Triggers, and we are glad to be seeing teams like Autonio speed up their development efforts by choosing our solution. There is no reason why crypto app developers should constantly be reinventing the wheel. By letting us take care of the intricacies, they save on time, money, and headaches.”
Autonio Foundation is a decentralized autonomous organization built around developing accessible, easy-to-use training tools and services. By democratizing access to intelligent trading tools, the platform allows crypto traders to conduct deeper trading analysis, pool funds for their original strategy, and deploy complex algorithms.
Autonio’s trading suites are based on Artificial intelligence technology. The suites require a stream of reliable blockchain data, which can create trading alert systems or complex trading strategies 0based on specific triggers.
By integrating PARSIQ’s Smart Triggers, Autonio will easily monitor blockchain data for relevant events. The partnership will also allow Autonio to access the PARSIQ toolset. The toolset allows traders to conduct strategies based on on-chain triggers such as transactions coming to large wallets. Additionally, Autonio will also use PARSIQ monitoring technology to gauge NIOX AI-based effectiveness, strategies, and efficacy.
Antonio will also be able to use PARSIQ tools for analytic purposes. The tool will allow the company to monitor withdraws and deposits transactions to the NIOX DAO, allowing them to understand their users. The analysis will be key in developing key metrics that will enable tracking growth.
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