After an incredibly disappointing year in 2018, Bitcoin woke up from hibernation in early April 2019 and rebounded with a vengeance to an annual all-time high of $ 13,800. Unfortunately, all good things have to come to an end, and this was the case with Bitcoin when price became overwhelmed and began to retreat.
Bitcoin’s current discomfort in the $ 7,800 to $ 8,500 range has led to a series of price estimates of where the digital asset could go as the 2020 Bitcoin halving event approaches. This week, Cointelegraph spoke to veteran trader and bitcoin expert Tone Vays to let his brain know about the current state of bitcoin and his thoughts on the future of digital assets.
filbfilb: tone, it feels like a bit of deja vu; You asked for a descending triangular division and now we are back. The last time this resulted in Bitcoin completing an 85% retracement of the parabolic advance to the low of $ 3,000.
A similar breakdown would bring us back to around $ 5,000 this time around, which is not too far from the triangle breakdown target. With that said, where do you think we are going?
Ton Vays: I think we are on our way into the low $ 7,000 area, but if that area can’t quickly reverse the price and we consolidate there as we do now in the low $ 8,000, then $ 5,000 becomes a reasonable one and likely destination.
FF: Do you think it is possible that we will get even lower to the new lows of 2019?
TV: Yes, I’m one of the few who has never trusted this $ 14,000 surge and thought it wasn’t organic, even though my good friend Willy Woo can explain it from a fundamental on-chain volume perspective . I give a 20% chance that we will fall back to the $ 3,000 low area or even hit new lows for a short period of time.
FF: What is your price expectation 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’s going to rise in that range. However, these year-end projections have only two results. Getting praised for a good guess or making fun of being wrong. That’s what I think right now, tomorrow it might change.
BTC / USD Daily Chart. Source: TradingView
Block half the reward
FF: I would like to ask for your opinion on the halving of the block reward due next year. There seems to be a newly-found consensus that stock-to-flow modeling, which implies that there is a direct relationship between a decrease in the rate of inflation and an increase in price over time, confirms that Bitcoin will take off sometime after the halving event Could be worth $ 100,000. How do you rate the model? Is it useful?
TV: I like stock-to-flow modeling, it makes sense, but in the long run I don’t see it as useful 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 huge challenge and would bring Bitcoin over a $ 1 trillion market cap. This means that Bitcoin would intervene in the space occupied by the gold market.
Do you think $ 100,000 is achievable in the next few years under the right circumstances?
TV: I think $ 100,000 for a bitcoin is achievable after this upcoming halving, but remember, we will have 4 years left until the next halving sometime in February or March 2024.
If Bitcoin is to hit the $ 100,000 environment, it will most likely be late in 2023 as speculation soars into the next halving. However, like all other unsustainable exponential spikes, I can also see them drop back to $ 20,000-25,000 for another major correction. Remember, the faster we get up, the harder we fall.
FF: What foundations would be necessary to get us there from a technical point of view (development policy or otherwise)?
TV: I am keeping my eye on several global catalysts that could keep Bitcoin’s value up to $ 100,000 tomorrow:
In 2013 we had the Cypriot banking crisis, then in 2015 we had the closure of the Greek banks. If similar events are to repeat themselves in Europe, I believe it will drive Bitcoin higher.
Imagine if the Brexit vote takes place in a country that actually has 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 nations try to eliminate cash and introduce negative interest rates, it can lead many people to Bitcoin.
In our own space there are still a lot of people who are invested in shitcoins. I had grossly underestimated how much Bitcoin would rise in 2019 with a small group of big shitcoins like Litecoin, Ether and XRP.
Although Bitcoin already dominates 70%, Ethereum takes another 20%. Once people fully realize how useless and unstable this project is, a mass exit from Ether can actually drive Bitcoin very high for a run on the Ethereum bank due to Bitcoin’s low liquidity.
FF: The physically settled Bitcoin futures product offered by BAKKT implies that institutional actors may expect some underlying demand for Bitcoin exposures.
Do you think this is a “Build it and They Come” venture, or do you think they are aware of the pent-up demand for Bitcoin engagements?
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 physically traded futures from the start that would have been interesting, or if BAKKT had created an exchange for centralized liquidity, the way stocks work, 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. How do you rate 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 reputable financial institution approved to work with Bitcoin, it is becoming increasingly difficult for governments in most countries to criminalize its use as they do with cannabis.
In terms of direct effects, there is nothing BAKKT does that CME, Coinbase, Kraken, Gemini and Fidelity have not yet offered. 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 and that is why regulators should oversee them. However, if you want to talk about real manipulation, let’s talk about diamond prices. How come I can’t trade these futures on a free market like corn, gold or bitcoin?
FF: You are a well-known skeptic of altcoins (to put it lightly) and have kept asking about their questionable legal status. Do you still believe that the financial regulators will eventually catch up with these projects?
TV: If I’d answered that question a week ago, I would have said yes, but after the SEC saw the $ 24 million fine for EOS developers when they stole $ 4 billion through an unregistered security of their scam token It’s basically the go-ahead to break the rules with a swipe of 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 the 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 start it at some point, but it won’t compete with Bitcoin. It will not have any of the properties that give Bitcoin any value, such as unfiscatability, censorship-resistant value, transfer and monetary hardness versus competing gold dominated by decentralization and mathematics.
Facebook’s Libra is no different from the current financial system. Instead of a government-appointed official who decides on the pressure, it will be a centralized group of private companies. They always have the option to censor transactions and seize / freeze your funds if they choose or if requested by the government.
FF: They seem to be everywhere. What is the most exciting thing you have expected in the next six months?
TV: I am very excited about 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 trade education component for high net worth individuals and miners looking to navigate the financial markets. The event is almost sold out so I may have to do another one in the Caribbean in 6 months.
We also have the 2nd Annual Unconfiscatable Conference & Poker Tournament in Vegas from February 20th to 23rd. We’ll be bringing Understanding Bitcoin back to Malta in May as well, but no details on it yet.
It’s a really exciting time for bitcoiners!