Bitcoin Price Forecast 2018
Can you fathom a measly $50.00 investment turning into a whopping $2.0-million hoard in just under eight years? I can’t! But it happened!
The earliest investors saw a staggering 40,000% gain in Bitcoin prices since this cryptocurrency first went into circulation in 2009. If you’re a Bitcoin investor looking for a sound Bitcoin price prediction 2018, then rest assured, because some obvious tailwinds are likely to push prices further up north in the coming years. I say this regardless of how many more Bitcoin halving events come and go.
You see, Bitcoin prices made history this year. Prices rallied to all time highs. There is a reason why, and I’ll get to that shortly.
First, let’s give credit where it’s due. Bitcoin founder Satoshi Nakamoto created this cryptocurrency in the hopes to someday replace fiat currency. Up until last year, that idea seemed merely the figment of a fool’s imagination. It’s true that naysayers long decried the practicality of Bitcoin as an alternative mode of payment. But, as it turns out, they are on the wrong side of history.
Bitcoin has managed to garner significant public interest from around the globe. In fact, the fan base of Bitcoin bugs, who subscribe to the idea of a borderless, free-market currency not controlled by the invisible hands of any central bank or government, is exponentially growing.
To give you an idea, up until the end of 2016, a Bitcoin price prediction of $2,000 had seemed absurdly high. But today, price targets for 2018 are being raised to five-digit figures, with some quoting a figure as high as $13,000 a bitcoin!
If you think that number sounds outlandish, wait until you hear the six-digit Bitcoin price prediction for 2030.
Some renowned Bitcoin bugs are forecasting the Bitcoin price to hit a whopping $500,000! No kidding!
Yes, $500,000 for one BTC in just 13 years! It may seem bizarre in absolute terms, but if you look at it in percentage terms, that’s just about a 21,000% gain in price—a little over half the stupendous 40,000% return we’ve already witnessed.
Case in point, the market is already flooded with a plethora of wild Bitcoin price predictions for 2018. So I’m not going to follow suit and put another hefty price tag on Bitcoin’s value in the future. Instead, I’ll go with a different spin for my analysis.
Rather than making a Bitcoin price prediction 2018, I’m going to make a Bitcoin demand prediction for 2018. Hopefully, that will help you wrap your head around these high quadruple-digit Bitcoin price forecasts.
Is There More Upside to Bitcoin Prices?
My one word answer: Yes!
You see, in the supply/demand price equation, the supply of bitcoins is a constant. Nakamoto wrote the Bitcoin code in such a way that only a total of 21 million bitcoins will ever come into circulation. So far, a little over 16 million have been unlocked from the code and put into circulation.
With supply out of the picture, the only other variable that can shift Bitcoin prices is demand. And demand is skyrocketing!
You may find my clichéd choice of verb somewhat dubious, but hear me out and you’ll realize why this Bitcoin price prediction is not an overstatement.
Let’s first establish one fact: for Bitcoin demand to keep growing, average people like you and me will have to be given an incentive to transact in this digital currency. Let me give you an idea what these incentives could be.
- People will be able to make payments for goods and services using bitcoins, with both ease and speed.
- Countries will legalize and regulate Bitcoin use, then start taxing it like fiat currency.
- Businesses will start accepting Bitcoin as a mode of payment.
- Banks will start selling Bitcoin-based financial products and services.
All of these incentives will create an economic environment suitable for this alternative currency, similar to fiat currency.
Now, what if I tell you that these incentives have already been dished out in certain parts of the world?
To give you an idea, Bitcoin is already being used as currency in certain remote parts of the world, like far-flung villages in Afghanistan and Somalia, where commercial banks are few and far between. Likewise, technology-savvy locals are choosing to accept remittances to avoid waiting times and banking fees associated with foreign currency transfers.
In the developed world, a bajillion new Bitcoin startups have propped up in recent years. New Bitcoin-based products and services are being introduced every now and then—like Bitcoin wallets and Bitcoin commerce mobile apps—to make it easy for newbie Bitcoiners to transact in the cryptocurrency.
Meanwhile, a number of businesses in the U.S.—like Expedia Inc (NASDAQ:EXPE), Microsoft Corporation (NASDAQ:MSFT), Overstock.com, Inc. (NASDAQ:OSTK) and DISH Network Corp (NASDAQ:DISH)—have also started taking bitcoins as acceptable payment, and that number is growing. Likewise, other countries are following suit. Take, for instance, Japan where two of the country’s biggest retailers have started accepting bitcoins as payment.
On the same lines, central banks and governments are finally becoming a party to the Bitcoin revolution. Many central banks have officially accepted it as a legal currency. Countries like Russia and India, which formerly discouraged its use, are now opening up to it. European governments like Finland and Sweden have formal regulations in place similar to those for fiat currency and are also taxing Bitcoin use. In fact, Sweden’s regulatory body lately incorporated a company by accepting payment solely in bitcoins.
Interestingly enough, banking products and services built for Bitcoin are also becoming popular. Bitcoin debit cards are already in circulation, and now, the first-of-their-kind Bitcoin ATMs are being set up in Japan.
What’s more, mass-market interest in the currency is on the rise as people seek safe-haven investments beyond precious metals. Plus, Bitcoin is attracting privacy-conscious people who dislike surveilling governments and prying businesses.
Beyond Bitcoin, venture capitalists around the world are also funneling hefty funds into Bitcoin’s blockchain technology. Technology heavyweights like International Business Machines Corp. (NYSE:IBM) and big banks like Royal Bank of Canada (TSE:RY) are also investing in Nakamoto’s blockchain concept.
All in all, Bitcoin is quietly creeping into the mainstream.
My point is that these incentives are gradually luring more people to this cryptocurrency, ultimately continuing to push its demand skywards, all of which promises a very optimistic Bitcoin price prediction in 2018.
In a nutshell, demand is on the rise against a finite supply. If I go by economic theory, the sheer supply/demand mechanics suggest that prices should continue to trend upwards.
I’m looking at the metaphorical crystal ball in front of me (the Bitcoin price chart, in fact), and a vivid uptrend is obvious. Bitcoin price has already crossed the $2,000 milestone with Bitcoin market cap surpassing $40 billion. The next pit stop might be at $5,000 no later than 2018. So keep your eyes open!
Will Bitcoin Halving Affect Bitcoin Prices?
The concept of Bitcoin halving is fairly easy to grasp. Nakamoto wanted to ensure that Bitcoin prices couldn’t be manipulated. So he put certain limits on it.
I like to call Bitcoin the digital equivalent of gold. The similarities between the two are simply uncanny.
Just like gold, bitcoins must also be figuratively “mined” in order to be put into circulation in the economy. What Bitcoin mining literally means is to solve the mathematical puzzles, which Nakamoto created, in order to unlock bitcoins.
But miners don’t do it for free. They are rewarded with Bitcoin wages. For every mathematical puzzle they solve, they get to keep a portion of the unlocked bitcoins as a reward.
However, like economic theory suggests, as more and more miners come in, their compensation must fall. So roughly every four years, the amount of bitcoins being released out of each Bitcoin block (the digital equivalent of a gold mine) and the miners’ reward is going to halve. This is what is known as Bitcoin halving.
Now, Bitcoin halving is a boogeyman that scares most miners. In layman’s terms, halving threatens their mining business.
That’s because Bitcoin mining is a capital-intensive business just like gold mining. Bitcoin miners not only have to invest in expensive computers with super fast computing power, but they also have to pay hefty electricity bills to keep the servers up and running.
Naturally, if they’re not breaking even with these costs, they’ll go out of business. So, with rewards falling, the incentive to mine will dwindle, demand will fall, and so will prices. Plus, with more bitcoins in supply, prices will naturally face downward pressure.
Here’s a snapshot of the two past halving events and the one upcoming event. The next halving event expected in 2020 will cut down the reward for solving puzzles from roughly 12 bitcoins to about six bitcoins.
|Halving Date||Post-Halving Reward|
|November 28, 2012||25|
|July 9, 2016||12.5|
|Jun 23, 2020 (estimated)||6.25|
In theory, this does sound like a problem. In practice, however, the last two halving events have had little effect on prices. Whatever little price correction was witnessed was countered with an ensuing reversal, as Bitcoin prices made new highs in the following months.
So should Bitcoin halving scare you as an investor? Definitely not!
Bottom Line on Bitcoin Price Prediction 2018
Take note that I’ve backed my claim of higher Bitcoin prices with plenty of reasons that support growing demand for the cryptocurrency. Yet, a fair forewarning is that my Bitcoin price prediction could turn out to be erroneous, should the demand for bitcoins unexpectedly head south. So do your research before jumping on the Bitcoin bandwagon.
Nonetheless, I’m seeing way more upside to Bitcoin prices in the coming years. With prices hitting new milestones overnight, I foresee the $5,000 mark likely being reached sooner than later.