$4,000 Is Still the Bitcoin Price Prediction for 2017
Where is Bitcoin Headed?
Some analysts refuse to make a Bitcoin price prediction for 2017. They say the “right” words but, when push comes to shove, they don’t give us a concrete Bitcoin price target. I suspect it is because they don’t understand the technology. I made that same mistake once.
I openly laughed at my colleague who made a Bitcoin price prediction of $4,000 in 2017.
In my defense, I had been focusing on microchip stocks at the time. My research yielded some incredible winners for our 21st Century Technology Profits newsletter, so I was pretty happy.
But my colleague, Patrick Brik, was knee-deep in Bitcoin research.
After spending months in the world of digital currencies and blockchain, he emerged with an incredibly bullish take on Bitcoin. He predicted that BTC prices would reach $4,000 in 2017.
Everyone thought he was crazy because “Bitcoin true-believers” make those kinds of predictions all the time. But not us financial analysts, we are supposed to hold a little more skepticism in our estimates.
Nonetheless, Patrick insisted that Bitcoin was going to skyrocket. We got into an argument, even though Bitcoin was the last thing on my mind at the time. I simply did not believe it.
Then I looked at the data.
It’s embarrassing to admit, but Patrick was right and I was wrong. Bitcoin prices were indeed poised for a breakout. What with China’s capital controls, India’s demonetization, and the growth of initial coin offerings (ICOs), it seemed like a no-brainer.
History ended up proving Patrick right. BTC prices more than doubled over the following months.
They climbed past $1,000, $2,000, and even $3,000. A minor retracement followed this pattern, but those who invested in Bitcoin last year still got rich.
So when I say Bitcoin can hit $4,000 before the end of 2017, know that I didn’t come to that conclusion easily. It wasn’t confirming my prior beliefs. It was in spite of my priors.
Also Read: Hold on to Ethereum for the Long Term
And it turns out that I’m not the only one who changed their Bitcoin price prediction.
Goldman Sachs Group Inc issued a new report calling for a $4,000 handle on Bitcoin prices. One of the analysts wrote that it is “just a matter of time” before Bitcoin reaches its full potential. They also confirmed that blockchain would reach mass adoption in five to 10 years.
Bitcoin Price Prediction in 2017 Challenged by Ethereum
Despite these tailwinds, some people reject our Bitcoin price target. They think it’s impossible for BTC prices to keep rising, especially as new cryptocurrencies challenge its dominance.
We all know what they’re talking about. There may be more than 800 cryptocurrencies in existence (at the time of this writing), but only one of them poses a significant threat to our Bitcoin price prediction.
I speak, of course, about Ethereum.
Ethereum is more of a platform than a currency, however. It offers innovative features like smart contracts, which is something that Bitcoin simply does not have. It is also perceived as an upgraded version of Bitcoin, which raises the question: Is this bad news for Bitcoin’s worth?
Maybe.
Ethereum can harm Bitcoin over the long term, especially if network effects lead to a single currency dominating over the rest. But, in the short term, I think there is enough room for both Bitcoin and Ethereum.
They both represent the best of the cryptocurrency market. Bitcoin is immutable and Ethereum is adaptable. Plus they are the only two cryptocurrencies trading on free exchanges. The others have to be accessed indirectly through Bitcoin or Ethereum.
Let’s say you want to buy Monero, Dash, or Litecoin. You would first have to sign up at Coinbase or some other exchange, then change your U.S. dollars into Bitcoin or Ether (the currency used on Ethereum).
Only after changing your money into BTC or ETH can you buy Monero, Dash, or Litecoin. It’s a telling process. By putting Ethereum and Bitcoin as intermediaries, investors have assured that bullishness for “altcoins” translates into bullishness for Bitcoin and Ethereum.
In conclusion, Ethereum may affect the long-term arc of Bitcoin prices, but not its short-term outlook. It is unlikely to derail Bitcoin on its path to $4,000.00.
Additional Notes: Bitcoin Volatility and SegWit Deadline
That said, I don’t want to give you the impression that Bitcoin prices will have a clear path to $4,000. There is always risk, especially when it comes to huge moneymakers like Bitcoin.
For instance, Bitcoin’s main short-term risk is SegWit. It is the only factor I see affecting our Bitcoin price prediction in the next few months.
Before I explain what in the world “SegWit” means, you should know that Bitcoin transactions take forever. There is a silly limit embedded in the original code which limits the amount of data in each block.
This limit slows down the transfer of Bitcoin from one account to another. Some coders proposed a change to the source code called “Segregated Witness,” or SegWit for short.
SegWit would lift the limit, allowing more data in each block, and thus faster transaction times.
Problem solved, right?
Apparently not, because there is no CEO or president of Bitcoin who can enact this solution. The entire community needs to adopt SegWit for it to work. The deadline is August 1.
You may notice increased Bitcoin volatility as this deadline grows nearer, but I wouldn’t be too worried. More and more blocks are being mined under SegWit, which shows that the community is grudgingly on board with the idea.
Once we round the August 1 corner, I’m expecting another surge in BTC prices.
