As bitcoin rockets over $16,000 and Coinbase and GDAX experience minor service outages to keep up, I thought it would be worth revisiting some potential price targets. (If you use Coinbase, make sure to do most or all of your trading on the integrated GDAX platform using limit orders to minimize fees and costs.)
As much as many die-hard bitcoin supporters hate the comparison of the crypto asset to tulips, I will extrapolate from the peak cost of tulips during the Dutch tulip bubble to determine a potential peak price target for bitcoin, acknowledging of course that there are at least some differences (perhaps even in use cases, ha) between bitcoin and tulips infected with breaking virus.
At the peak of the tulip bubble, a single bulb would sell for about 200 gilders, which was 1.33 times the average annual wage of a skilled tradesman in the Netherlands. (There were also some extremely rare bulbs that sold for over 2000 gilders and even rarer bulbs that sold for over 5000 gilders!)
Basing our price extrapolation on the 200 gilder price and using a median US salary of approximately $44,000, that takes us to a price per bitcoin of $58,666, which would move the total bitcoin market cap from today’s $267 billion to $978 billion, almost a trillion!
This move would likely correspond with a move of the total crypto market cap over a trillion and bring us much closer to a market size that could affect the rest of the financial system, for good or ill.
Just for fun, if a bitcoin were to go for 2000 gilders or 5000 gilders in current US dollars, we’d be looking at a price per bitcoin of $586,666 and $1,466,665! Quite a price, but given the momentum, why not?
Let me know what your price targets are, and when you think the rise will peter out. It could be as soon as next week, when the futures start trading, or it may be in a year or two. If you have other thoughts on what US salary corresponds with the annual wage of a “skilled tradesman” in the Netherlands during the tulip bubble in 1636-1637, I’d love to hear them.
Great YouTube Resources
Here are some excellent and balanced bitcoin and crypto resources for your listening pleasure:
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