Today is 3rd November 2016. According to the coindesk.com, the price of a single Bitcoin (BTC) is USD743. My friend asked me “Is it a good time to buy BTC?” To answer this question, I would like to break it down into several viewpoints to analysis. Firstly, what is the nature of a Bitcoin? Can it store value? Why it’s price increase so much? Can this upward trend be continued? Where is the price – top, bottom, in the middle of upward or downward?
OK! Let start with what is a bitcoin? The Internet has different protocols. The HTTP protocol is for website browsing. FTP protocol is for transfer of electronic files. Bitcoin protocol is for transfer of financial value in an open ledge called blockchain. There is a ceiling on the total number of bitcoin to be generated which is 21 MILLION. Unlike the fiat currencies which has no limit on the number to be printed. Bitcoin mining is the process to get new bitcoins, but the difficulties are progressive greater. In other words, there is a hard scarcity of this transfer of value function protocol “bitcoin“. People who want to transfer of value by this protocol should need to use their fiat currencies to buy it. It returns to the demand and supply economics. If the demand is getting greater and the supply is limited, the price will increase. Inversely, if the supply is greater than the demand, the price of BTC will drop.
It can store value because of the demand and supply equilibrium. It is very limited in number. It has a large amount of demand in the present circumstances. So, what are our position of the world economy now? To my personal point of view, it is in the darkness moment before the shiny morning. Why did I say so?
Quantitative easing began in 2008 and now becomes the QE infinity. The world economy cannot sustain this system forever. The eastern world has already established their system which will use gold-backed currency as the backbone to support the trades in-between counties. China’s one belt one road policy created on this backbone. It is easy to forecast that one day sometime from now. China will announce Chinese RMB is gold-backed. In contrast, the western unbacked currency system is near collapse. Money printing to infinity means money is worth nothing.
China is tightening the control the financial outflow of money. RMB trends to devalue on USD and gold. Chinese try ways to bring their money outside China. If the bank transfer blocked, Bitcoin will be the way to move the value outside the country.
Bitcoin halving has come across in July. History told us that the effect of Halving would manifest in the coming one year. (Halving means the number of bitcoin generated is reduced by 50% during the mining process every four years.)
US presidential election always means a catastrophe change on the world economy. I suggest you read the Roadtoroota Theory by Bix Weir and the Webbot ALTA report from Clif High and jsmineset.com from Jim Sinclair and Bill Holter. If you believe there is always a battle between good guys and bad guys behind the curtain, it is the time to get HOT at this moment.
In the short term, Webbot forecast that the price of a bitcoin will go to over $1000. According to my AI model BitBot for bitcoin, it is also on an upward trend.
Conclusion
Bitcoin’s supply is very limited with a significant demand. It can store value. The demand is getting greater and greater, and so the price will increase in the long-term. It is a moment for an upward trend just begin.
