Bitcoin Review: $100,000 or $1,000,000?

There have been a number of pundits, influencers and speculators who are convinced that Bitcoin will reach $100,000. Or, at least that is what many predicted at the beginning of 2021.  Bitcoin reached an all-time high price of $63, 503 on April 13, 2021 at 02:00 am. It has fallen to $30,000 -32,000 over the last few weeks.

Many influencers, like Bitboy Crypto, contend that institutions and others are manipulating  Bitcoin's price. They contend that institutions are pushing are Wyckoff accumulation.  The hope is to push Bitcoin's price below $30,000 in order to push out individual investors and accumulate large quantities of Bitcoin.

Bitcoin valuation is based on a model developed by PlanB.  S/he developed a Bitcoin pricing model based on the relationship between stock and flow model of scarcity. This model predicts that Bitcoin will reach $100,000 by the end of 2021 and eventually reach a price of $1,000,000. So far this model has been accurate; however, recently the model is not aligned with the realities of the marketplace.

The Stock to Flow model: https://stats.buybitcoinworldwide.com/stock-to-flow/

A good YouTube video on Stock and Flow model by Coin Bureau: https://www.youtube.com/watch?v=jfjjWAmGks4

From CoinMarketCap:

What Is Bitcoin (BTC)?

Bitcoin is a decentralized cryptocurrency originally described in a 2008 whitepaper by a person, or group of people, using the alias Satoshi Nakamoto. It was launched soon after, in January 2009.

Bitcoin is a peer-to-peer online currency, meaning that all transactions happen directly between equal, independent network participants, without the need for any intermediary to permit or facilitate them. Bitcoin was created, according to Nakamoto’s own words, to allow “online payments to be sent directly from one party to another without going through a financial institution.”

Some concepts for a similar type of a decentralized electronic currency precede BTC, but Bitcoin holds the distinction of being the first-ever cryptocurrency to come into actual use.

Bitcoin's price:

Bitboy Crypto argues that the crypto market is dictated by Bitcoin's price movements. The correlation matrix suggests that he may be right.  Ethereum and Dogecoin are highly correlated with Bitcoin.  This is strange since Bitcoin is considered a "Digital Asset" and Ethereum and Dogecoin are considered "Digital Currencies".  We also would not expect Bitcoin investors to invest in Dogecoin and vice-versa since many Bitcoin investors consider Dogecoin to be a "jokecoin".  

Bitcoin Dominance

Bitcoin and DJIA:

Examining the relationship between Bitcoin and the Dow Jones Industrial Average, there are 3 things that stand out.  The first is that Bitcoin and the DJIA are not correlated with each other. This would suggest that Bitcoin is in fact its own asset class and many investors may want to hold Bitcoin to diversify their portfolio.

The second thing is the impact of government and NYSE regulation. The relatively stable index movements of the DJIA compared to the Bitcoin show how regulation keeps assets price movements stable over time.

The third thing is that many investors love cryptocurrencies because of the volatility in prices. I read one comment on YouTube that stated that "Bitcoin was boring now there were no changes in prices".  Bitcoin's volatility is its main attraction to many investors hoping to get rich quick.

Bitcoin and Google Trends: