What will drive the price of Bitcoin?

There are a lot of bold predictions about the future price of bitcoin.  There are extreme numbers flying around on each side of the fence.  Many opponents, especially those who work for the banking sector, claim it is a ponzi scheme and Bitcoin will go (back) to 0.  Proponents are putting forward numbers that range from euro 10K/BTC to euro 1M/BTC.  So, who is right?

The obvious answer is that only time can tell, but in the meantime, there are very good indicators to make some predictions. 

It is important to note that the opponents may have a hidden agenda in suggesting that crypto may go to 0, but unlike physical goods like gold and silver, Bitcoin has no inherent value.  So it is possible, but not likely, it may loose all value.  The main reason could be failures in the algorithm or technology underneath Bitcoin.  Given the track record of Bitcoin, this is very unlikely...  But the people that use this argument usually make one big mistake (either deliberately or through ignorance) and that is that the fiat currency they deem safer also has no inherent value.  Even worse, every single fiat currency (there have been thousands of them) has gone to zero.

So, barring technological apocalypse, what drives the price of Bitcoin? 

The price of Bitcoin as that of gold and silver is driven by supply and demand, Bitcoin also has a known finite limit of coins that can exist, which puts a cap on the supply side (unlike fiat money that is being printed at insane amounts, devaluing what is in your bank account already).

So the price of Bitcoin will depend mostly on demand for the finite amount of coins out there (off course, bit transactions will have their impact).  So the essential is what will drive demand for Bitcoin?

And here we get to the key point.  Bitcoin is very cool technology, but most people don't care about that.  Most people don't understand technology and the combination of VISA, bank accounts and cash works fine for them.   Yet the increased adoption of Bitcoin can't come from technology enthusiasts alone, non-technical users are increasingly adopting Bitcoin despite the learning curve for them.  Why?  Because their trust in the current system is collapsing.

Bitcoin prices are soaring, even rising faster than most of it's avid supporters had predicted.  And the big jumps seem to align nicely with repressive economic regimes.  Banks and governments traditionally fear gold and silver, but in a crisis they always resort to confiscating gold, so gold may be safe from the effects of economic crises, that durability makes it a target for government theft.  Bitcoin and other cryptos are arguably the only assets that cannot easily be stolen from you, it is even quite easy to hide that fact that you own them.

So, to predict the rise of Bitcoin value, the key driver will be instability in the legacy, centrally planned, economic system.  It is a mathematical certainty that, given some ups and downs, that the economy as we know it is going down, the exponential interests on each unit of currency created make this an absolute fact.  To make money on you Bitcoin, the key will be to read the global political landscape correctly and to adjust your strategy accordingly.

For example, if you dig through documents from the IMF, there are clues that they will ban cash in Europe in the coming years, which means that each payment, no matter how small, will be subject to government scrutiny and taxation.  Predicting this moment accurately will predict a huge spike in bitcoin prices, a spike that will mean a permanent new high.

I predicted that Bitcoin would pass 2000 euros by the end of 2017, I was wrong in that it happened half a year sooner.  And while I am certain there will be attacks on the Bitcoin price as governments and central banks will mount an unseen offense to take it down, the long term trend will be growth.  Governments are almost ready to take away every tax heaven you could reach, but Bitcoin is a tax haven that they  cannot reach, they cannot control or cannot pressure to give up details.  It will keep rising with every economic crisis and every repressive government action.

I think the 10M/BTC is not realistic in a liftetime, but I would be highly surprised if we don't make euro 10K/BTC in the coming 5 years.  If the attacks or vicious enough, it may be even higher.  But the bottom line is that BTC will be a good investment, regardless if you got in years ago or you start now.   And keep an eye on political news should you want to speculate on short term prices!