Bitcoin Won't Rise to $500,000 Until a Financial Crisis Happens

I keep hearing: one company is buying bitcoins, another country is implementing crypto payments. Where is the growth: the one that many are waiting for?

An example of recent news:

“…Experts predict that in the next year and a half, American companies will invest about $10 billion in bitcoin. The reason why investors are planning to invest such amounts in bitcoin…”.

To understand what these $10 billion can do for the market and whether they can affect the price, let's figure it out. Otherwise, such news does not make sense.

Suppose one bitcoin costs ~$50,000, and $10 billion at the current price is a little more than 200,000 BTC.

If we take into account the capitalization of ~$1 trillion, then $10 billion is approximately 1% of the total capitalization of bitcoin.

Bitcoin's daily trading volume varies, but let's take the average for six months - about $20 billion per day.

If the $10 billion purchase is spread over 18 months, it will amount to about $556 million per month, or $18.5 million per day, which will be only 0.1% of the average daily trading volume.

A tenth of a percent is not a revolution and will not have any impact on the market.

For example, a combination of several significant factors will be required for the price to grow tenfold:

  1. Large financial institutions (banks, pension funds, insurance companies) will begin to include Bitcoin in their portfolios en masse.

  2. A serious global financial crisis, causing a loss of confidence in money and payment systems.

  3. Large technology companies (Apple, Google, Amazon) begin to store a significant part of their reserves in Bitcoin and allow accepting payments in cryptocurrency.

It is hard to believe at the moment. Therefore, for the price to grow 10 times, everything needs to happen at once. But who would buy Bitcoin at $500,000? Without mass practical use and institutional recognition, maintaining such a high price is an impossible task.

#bitcoins #crypto #financial_crisis #crisis

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