Bitcoin Price Predictions and Why Prices Matter

Bitcoin prices just crossed $12,000 again, and even though this is not the first time, it feels dramatically different this time. The overall global macro situation and the heated crypto market makes it different. It brings back memories of Bitcoin’s price rising slowly exactly 4 years ago, in the fall of 2016. 

I’ve been involved in Bitcoin since early 2011, so this is my tenth year now. Throughout the past 10 years, the price of Bitcoin has always been an important component of its story. Many people say that Bitcoin’s utility is the most important for this decentralized digital currency, but I would also say that so is its price.

Why? What if Bitcoin had a stable price, fixed to the US dollar? Aside from talking about whether it's technically possible to have a decentralized digital currency that is fixed in value to an external currency (answer: it’s NOT possible), if Bitcoin’s price were stable, then it would mean that it has no protection against the inflation of existing fiat currencies. 

At the core of Bitcoin’s design is the plan for having an eventual total of only 21 million units of bitcoins in circulation. That’s the limit! This rule was set on day one, back when Bitcoin launched in early 2009, and this rule will not ever change. So when you put Bitcoin in a world where fiat currencies are printed in unlimited quantities, then it becomes obvious why the price of Bitcoin, when measured in the ever-expanding supply of fiat currency, will just continue to go up in the long run. In fact, I predict this won’t ever stop, until the measuring base currency (the US dollar) dramatically slows down the printing and stops inflating.

The conclusion: due to its design with the fixed supply of 21 million, Bitcoin prices will continue to go up in the foreseeable future. Though we know the direction of the price trajectory (up), the actual day to day prices will be very volatile. This is purely human nature: through greed and fear, human participation in the free market causes Bitcoin prices to overshoot at times, and be underpriced at other times. Bitcoin will never rest at its ideal price, because traders will always come in to push it off balance.

With Bitcoin, expect the price volatility. And also expect the long term appreciation in price.

The 21 million limit is a core design of Bitcoin, and the corollary is that price volatility and continued upward price cycles are therefore also core features of Bitcoin.

In the long term, I fully expect Bitcoin to reach $1 million US dollar in price. This is only possible because of the continued and practically unlimited printing of the US dollar. How soon will it reach that price? Maybe another 5 years… or maybe 20 years later. Regardless, I can wait. Can you?

How will Bitcoin price get to such dizzying heights? It’ll take multiple bull market cycles. (At least two!)

Now that Bitcoin has passed $12,000 again, it’s time for me to share my price predictions again. I currently still stand by the price prediction I made on Twitter in December 2018:



I said that for this next bull market cycle, the rally would start late this year (2020), and probably peak out at the end of next year (December 2021), at around USD $333,000. That’s good news, but be aware that a crash could take the prices down 87% or more, from the peak. That would mean a rock bottom price of $41,000 by January 2023. Is that bad? Sort of, but that’s still a lot higher than today’s price of $12,000!

After that rally, the following one could be in year 2025, after another block reward halving in 2024. By then, Bitcoin block rewards will be at just 3.125 BTC, and the new Bitcoin supply through mining will be at just 450 BTC a day, for the whole global mining industry to share. That’s probably the earliest that I think Bitcoin prices can get to $1 million US dollars. It could very well take a bit longer also.

And in the short term, I think Bitcoin could get to $15,000 by the end of this year, December 2020. Let’s hope it doesn’t shoot past that, as we don’t want the bull market to overheat too soon.

Be patient, HODL, and hold on to your dear life!

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