A Case for $100K Bitcoin

Many Bitcoin authorities predicted that in the year 2020, we would see Bitcoin reach $100 000 USD. Since then, Bitcoin and cryptocurrency authority Pompliano, has predicted that the Bitcoin price will reach $100,000 by the end of 2021. This comes after Pompliano first predicted this price in 2017. However, there are more and more reasons to think that $100k Bitcoin is becoming increasingly likely.

The Bitcoin price in CAD (or any other fiat currency) is determined by the Bitcoin market alone -how much it is bought and sold for on exchanges. Bitcoin’s value is a lot like a typical commodity, such as gold, which is why it is often compared to gold. The reason is that Bitcoin is a lot like gold, in that there is no other value that backs or determines its worth. 

Bitcoin

Unlike bonds, equity, or real estate, which gain value from liquidity, Bitcoin’s value is in the technology and the fact that there is a limited amount. And, given our current economic shifts, from the pandemic to increasing globalization, there is a very real need for digital currency.

What is Bitcoin?

Bitcoin is a totally digital asset that was created by the pseudonymous Satoshi Nakamoto in 2008. Bitcoin was the first cryptocurrency to prove that secure digital assets were possible when built on a decentralized blockchain network. And with the addition of strong, unbreakable code and (nearly) unhackable encryption, the first successful cryptocurrency was realized. Since then, Bitcoin and other cryptocurrencies have continued to demonstrate an incredible adoption rate and asset liquidity. 

What determines the price of Bitcoin?

As mentioned, market demand is the primary determining factor for Bitcoin. In February 2020, Bitcoin was valued at around $10,000 USD. And as of the time of this article (Feb 2021), it is valued at over $35,000 USD -which means that the Bitcoin price in CAD is nearly $45,000.

One of the contributing factors for this huge swing of volatility is that on May 11, 2020, the third halving of Bitcoin occurred. Halving means that fewer Bitcoin are mined from now on. In 2008, when Bitcoin was created, 50 Bitcoin were created (mined) every ten minutes. That dropped to 25, and the number of new Bitcoins created in each new block will again drop from 12.5 to 6.25 in time. 

Halving is all part of the code, and it is totally automated. Halving was designed to create scarcity, and once 21 million Bitcoin has been mined, no more new Bitcoins will be created. This is meant to do two main things: drive up the value of Bitcoin due to scarcity, and we get closer to the point where Bitcoin is put into regular circulation, just like digital cash.

What does $100k Bitcoin mean?

While there have been several $100k Bitcoin predictions, one of the reasons that proponents see Bitcoin as getting closer to that goal is that larger institutions have begun to endorse the cryptocurrency. Some of these are: 

  • Square and MicroStrategy, now have a treasury of Bitcoin
  • The Office of the Comptroller of the Currency (OCC), now allows American banks to offer crypto asset custody
  • PayPal has enabled crypto purchases/sales
  • Fidelity is increasing efforts for cryptocurrency engineering projects
  • Traditional asset managers such as Paul Tudor Jones and Stanley Druckenmiller 

Will Bitcoin Get There?

Going forward, halvings will occur more frequently. Halving is built into the code, and so it is automated, and it does not dictate the exact price of Bitcoin. However, halving does mean increased scarcity for Bitcoin, which should continue to drive the price of Bitcoin up. 

Presently, the adoption rate of Bitcoin continues to climb, which is the main reason that explains the rise of the Bitcoin price in CAD and other fiat valuations. It is evident that those individuals and institutions with the capital to do so will continue to invest in Bitcoin. 

Is there a case for the $100K Bitcoin? Many investors believe there is. Only time and intelligent investment strategies will tell.