Is It Possible for Bitcoin to Get to $15,000 Before February 2018?
Undoubtedly, Bitcoin (BTC) is on track to reach the $15,000 mark by February 2018. It's just as plausible for it to drop to $1,500. The key factors to consider are velocity and volatility, traits that Bitcoin inherently possesses.
The Importance of Velocity and Volatility
BUY: If you invested in cryptocurrencies, even as recently as June, your investment in Bitcoin likely tripled in value. The same can be said for Ethereum and Litecoin. Over the same period, you've experienced substantial market swings.
The conclusion: Bitcoin is overvalued. My recent attempt to back out an intrinsic value estimate put it around $1,600. While the mania is real, I don’t foresee a significant crash before February. We will experience some panning and profit-taking, but institutional money can get caught in an echo chamber, especially in the absence of contradictory data. Investment banking analysts are targeting Bitcoin to reach $11,000 to $14,000.
Key Reasons to Expect Bitcoin to Reach $15,000 by February 2018
February is an intriguing timeframe for Bitcoin due to three major reasons:
The January FOMC Federal Reserve Meeting
Firstly, the January Federal Open Market Committee (FOMC) Federal Reserve meeting minutes will be released, and Yellen will hand over the chairmanship to Powell (assuming his confirmation). Under Chair Yellen, the FOMC has been gradually raising interest rates despite a poor external macroeconomic environment. Powell is likely to maintain a similar stance. However, with quality bonds returning poor yields, overvalued domestic equities, and underperforming commodities, Bitcoin's recent performance and speculative upside have made it a favored investment.
US Holiday Retail Reports
Secondly, the holiday retail reports from brick-and-mortar retailers could provide insights into how the retail sector is faring. If we see poor performance in February, there could be a spike in unemployment, stalling the economy, and prompting a binary decision for Bitcoin investors: do they hold onto it or cash out? The economy is already tepid, and a further shock could influence investor sentiment.
Regulatory Impacts
Thirdly, regulatory impacts will be crucial. Through December, many regulators will be focused on closing their calendars. However, with Congress and President Trump trying to push through tax reform in the remaining weeks, we can expect some delayed or renewed actions in the new year. By the end of February, 10.5 weeks of trading at BTC futures will have transpired. While this may not be a lot of time, it will offer regulators enough data to revisit the regulation of cryptocurrencies and other underlying assets. This period from February to April 2018 may see renewed scrutiny from bodies such as FINRA, the SEC, and the FCA and ESMA.
Personal Opinion vs. Investment Advice
These insights are based on my personal opinion and should not be treated as specific investment advice. I aim to provide a holistic view of the factors influencing Bitcoin's trajectory.
Additional Resources
For further insights on the evolving regulatory and legal issues surrounding cryptocurrencies, including investment due diligence steps, consider checking out the podcast I am launching.