In recent weeks, the Bitcoin course has been able to build up enormous momentum.
This week, BTC reached highs of over 18,000 USD. From the annual high, which is at $18,393, it is just about 10% that is missing until the all-time high. Thus inevitably also the question arises, where the journey of the Bitcoin course in the next months goes and whether a Bitcoin price of 100,000 dollar would be realistic in the near future?
Evaluation of the Bitcoin course on classical principles?
Both in the crypto, and the financial world a debate over the fundamental evaluation of Bitcoin prevails for years. While there are proven valuation methods for asset classes such as shares or bonds, the valuation of crypto currencies but also precious metals is somewhat more difficult.
With shares for example enterprise values, balance sheets and cash flows can be used as basis, in order to approximate the future, expected cash flows in the best possible way and to create thus a valuation basis.
With commodities, such as precious metals, the approach is based much more on their benefits and the principle of industrial demand and supply.
Approaches for the value of the crypto currency
With Bitcoin, on the other hand, it is not trivial to use basics for evaluation. Possible approaches to this are:
Innovative strength and first-mover advantage of a network: Bitcoin is the first hard and decentralized digital money. Already here, value is created by the size of the network.
Scarcity: The currency BTC is a scarce and limited in number, combining properties such as durability, accessability, divisibility and above all censorship resistance.
Bitcoin fulfills the important characteristics of the Store of Values for private investors – and meanwhile also many institutional investors and stock companies.
Thus, it can be argued that Bitcoin has already passed the phase of „collecting“ in evolution, because the good itself is scarce, and is used as a store of value. Thus we are now in the „investment phase“, which has been accelerated by various exogenous factors:
Examples of these are the effects of Covid-19 and the central banks‘ money supply increase.
As a result, the crypto currency has been repeatedly referred to in the media this year as a store of value and digital gold.
Bitcoin exchange rate explosion due to high demand
Now there are different scientific studies, which deal with the question of the perfect allocation of Bitcoin in the Portfolio.
Here there are different approaches depending upon risk aversity of the investor. Fidelity for example recommends an allocation of approximately 5% of the Portfolio in Bitcoin.
Now one can look for example on the fortune of the US households. Here we see total assets of USD 112 trillion, with USD 78 trillion alone falling to the richest 10%.
Since wealthy households and investors in particular are engaged in intelligent money management, it is likely that they will invest part of their assets in BTC. If one assumes here only 2% of the assets as demand site, one already comes to 1.5 trillion dollars on the demand side.
Considering the current market capitalization of about 330 billion dollars, this would be a further increase by a factor of about 4, so the Bitcoin price would be about 90,000 – 100,000 dollars.
Furthermore, this scenario only considers the richest 10% of US households. If one would apply a similar consideration to the global wealth and add the demand from institutional investors and hedge funds, the demand site would probably be even higher.
So would the Bitcoin exchange rate reach a value of $100,000 already next year? – Difficult to say. Is it realistic and likely that Bitcoin will reach this price in the next 5-10 years? – Yes, definitely.
Buy Bitcoin already now with PayPal
The award-winning eToro trading platform lets you buy Bitcoin with PayPal. You also have direct access to other crypto currencies as well as stocks, commodities and other financial products.
Sign up with eToro today and put the platform through its paces in the demo version. Buying via PayPal means that you won’t be able to send BTC to your own wallet for 180 days. This is especially interesting for investors who don’t want to deal with an own wallet. After only 10 minutes you can make your first Bitcoin purchase.