After an incredibly disappointing 2018, Bitcoin woke up from hibernation in early April 2019 and rebounded with a vengeance to an annual high of $ 13,800. Unfortunately, all good things have to come to an end, and this was the case with Bitcoin when the price inflated and began to pull back.
Bitcoin’s current malaise in the $ 7,800-8,500 range has resulted in a multitude of price estimates of where the digital asset could head as the 2020 Bitcoin halving event approaches. This week, Cointelegraph spoke to veteran trader and bitcoin expert Tone Vays to ask his brain about the current state of bitcoin and his thoughts on the future of the digital asset.
Bitcoin price
filbfilb: sound, it feels like a little déjà-vu; You have asked for a descending triangle collapse and here we are again. Last time, this caused Bitcoin to complete an 85% retracement of the parabolic surge into the low $ 3,000.
A similar collapse would bring us back to about $ 5,000 this time around, which is not too far from the goal of the triangular collapse. So where do you think we’re headed?
Ton Vays: I think we’re headed for the low $ 7,000 area, but if that area can’t quickly reverse the price and we consolidate there as we are doing now in the low $ 8,000 area, it becomes $ 5,000 a reasonable and likely target.
FF: Do you think it is possible that we will go even deeper to the new 2019 lows?
TV: Yes, I’m one of the few who never trusted this $ 14,000 surge and felt it wasn’t organic, even though my good friend Willy Woo can explain it from a basic on-chain volume perspective. I give a 20% chance that we will fall back into the low $ 3,000 range or even make new lows for a short period of time.
FF: What is your asking price for the end of this year?
TV: I think the price will be between $ 7,500 and $ 8,000 by the end of the year, but it will climb into that range. However, these year-end predictions have only two results. Being praised for a good guess or being made fun of for being wrong. I think that right now, tomorrow it could change.
BTC / USD daily chart. Source: TradingView
Block reward halving
FF: I would like to ask for your opinion on the halving of the block reward that will take place next year. There seems to be a new consensus that stock-to-flow modeling, which implies that there is a direct correlation between a decrease in the rate of inflation and an increase in price over time, confirms that Bitcoin will have a value sometime after halving of $ 100,000. What is your opinion on the model? Is it useful?
TV: I like stock-to-flow modeling, it makes sense, but in the longer term I don’t think it makes sense to analyze Bitcoin in the short term as its pricing is dominated by speculators in an illiquid and immature market.
FF: $ 100,000 for Bitcoin seems like a big deal and would propel Bitcoin above a $ 1 trillion market cap. This means that Bitcoin would start to break into the space occupied by the gold market.
Do you think that under the right circumstances, $ 100,000 is achievable in the next few years?
TV: I think $ 100,000 for one bitcoin is achievable after this upcoming halving, but remember, we have 4 years until the next halving sometime in February or March 2024.
If Bitcoin is to hit the $ 100,000 mark, it will most likely be late 2023 as speculation about the next halving mounts. However, like any other unsustainable exponential rise, I can also see it drop back to the $ 20,000-25,000 area for another large correction. Remember, the faster we rise, the harder we fall.
FF: What basics would be necessary to get us there from a technical point of view (developmental or otherwise)?
TV: I am keeping my eye on several global catalysts that could even increase the value of Bitcoin to $ 100,000 tomorrow:
In 2013 we had the banking crisis in Cyprus, then in 2015 we had the closure of the Greek banks. If similar events repeat themselves in Europe, I think that will drive Bitcoin higher.
Imagine if the Brexit vote takes place in a country that is actually on the euro, like Italy or Spain, its citizens will overturn Bitcoin for financial reasons.
The ongoing war on cash, tax evasion and money laundering. As more developed countries try to eliminate cash and introduce negative interest rates, this can drive many people to Bitcoin.
In our own space there are still a lot of people who have invested in shitcoins. I had greatly underestimated how much Bitcoin would rise in 2019 with a small group of big shitcoins like Litecoin, Ether and XRP.
Although Bitcoin already has a dominance of 70%, Ethereum still occupies another 20%. Once people fully realize how useless and unstable this project is, a mass exit from Ether can actually drive Bitcoin very high due to Bitcoin’s low liquidity to handle a run on the Ethereum bank.
BAKED
FF: The physically settled Bitcoin futures product offered by BAKKT implies that institutional actors may expect some underlying demand for Bitcoin exposure.
Do you think this is a “build it and they will come” venture or do you think you are aware of the pent-up underlying demand for bitcoin exposure?
TV: I think the “build it and they will come” view for BAKKT is reasonable, but don’t confuse it with “start it and they will rush to your door” like a new iPhone. I don’t see any difference between physically settled futures and buying your bitcoin from Coinbase.
If CME had been doing physically settled futures from the start, that would have been interesting, or if BAKKT had created an exchange for centralized liquidity like it does with stocks and turned companies like Bitstamp into brokers, that would have been interesting too.
FF: Many people are suspicious of the project in the sense that some are speculating that it could be used to manipulate the price of Bitcoin. What is your opinion on the product, do you think it is overall optimistic for the space?
TV: I think the best thing about BAKKT is that it makes Bitcoin more financially and legally acceptable. With any regulated and respected financial institution approved to work with Bitcoin, it is becoming increasingly difficult for governments to criminalize its use the way they do with cannabis in most countries.
In terms of direct effects, there is nothing BAKKT does that has not already been offered by CME, Coinbase, Kraken, Gemini and Fidelity. Combining parts of what other companies are good at into one is not innovative and does not guarantee success.
As for manipulation, people say when they lose on a trade. Sure, big companies will try to take advantage of power when they have power and that is why regulators should watch them, but if you want to talk about real manipulation we are talking about diamond prices. How come I can’t trade these futures on a free market such as corn, gold or bitcoin?
Altcoins
FF: You are a well-known skeptic about altcoins (to say the least) and you have kept asking about their questionable legal status. Do you still believe that financial regulators will eventually catch up with these projects?
TV: If I had answered that question a week ago I would have said yes, but after the SEC saw the $ 24 million fine to EOS developers who stole $ 4 billion from an unregistered security of their fraudulent Tokens is basically the green light to the rules with one blow on the wrist and not even a warning not to do it again.
FF: Has it harmed Bitcoin overall?
TV: No, honey badger doesn’t care. At some point people will realize how stupid all these other coins are and that value will flow back into Bitcoin.
FF: Do you think Facebook’s Libra project will ultimately navigate regulation and launch a product to the public? If so, will there be competition for Bitcoin?
TV: I honestly don’t know, I think they’ll bring it to market at some point, but it won’t compete with Bitcoin. It will not have any of the properties that give Bitcoin value such as:
Facebook’s Libra is no different from the current financial system, but instead of government-appointed officials deciding how much to print, it will be a centralized group of private companies. You always have the option to censor transactions and confiscate / freeze your funds if you feel like doing it or if requested by the government.
FF: You seem to be everywhere. What is the most exciting thing you have planned for the next six months?
TV: I’m really looking forward to the Financial Summit in Bali. It’s a small event that I decided to do to connect young traders with hedge funds who can take their strategies to another level.
The event also provides an investment and trading training component for high net worth individuals and miners who wish to navigate the financial markets. The event is almost sold out so I might have to do another one in the Caribbean in 6 months.
In addition, the second annual Unconfiscatable Conference & Poker Tournament will take place in Vegas from February 20-23. We’ll also be bringing Understanding Bitcoin back to Malta in May, but no details on that yet.
It’s a really exciting time for bitcoiners!
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