A Load of Bull: Bitcoin Price Predictions for 2016
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As we move towards the end of 2015, I decided that it was time to start looking ahead to the new year by doing some research into what the top analysts and talking heads are saying we should expect of the Bitcoin price in 2016.
One thing became clear very soon as I trawled through the most respected news sites and searched for the opinions of well known personalities and analysts: the internet thinks that the price of Bitcoin will go up in 2016. In fact, its pretty much impossible to find anybody making a bearish (negative) case. Although it is almost as hard to find the kind of wild-eyed euphoric forecasts of million dollar (or even $10,000) coins that were commonplace in the past as it is to find forecasts of a falling price, something of a consensus seems to be emerging among journalists, analysts, bloggers, and users themselves, who all seem to be expecting a moderate price rise next year.
This surprising consensus could mean any of three things. It could mean that things are really coming together for this emerging digital currency, that there is every reason to think that it will continue to go from strength to strength taking the price with it, and that there are few good reasons to think that its value will fall. Alternatively, it could be a result of the fact that the period of time during which people like myself naturally start to look into forecasts for the coming year has simply coincided with a bullish period during which the price definitively broke upwards out of a long downtrend channel – causing impressionable analysts to project the current climate onto their models for 2016. Contrarian traders, however, may sound a note of caution by suggesting that it could also mean that the market is becoming irrationally optimistic, with nobody around to temper the current optimism with a healthy does of realism.
On that note of caution I will end this introduction and share with you my roundup of the top forecasts and predictions for the price of Bitcoin in 2016.
Bitcoin Price Polls
One of the first polls was conducted by CoinDesk who surveyed their readers and published the results on November 9th. This reader survey found that 48% of Bitcoiners believed that 2016 would kick off with the value of 1 BTC already over $500 USD.
An ongoing poll on CoinTelegraph, which launched on 6th November, shows the largest group of their readers, currently standing at 37%, predicting a value of $500-$1000 in 2016. Interestingly, the second largest group, currently at 25%, voted for ‘over $1000’. The CoinTelegraph poll page also shares the results of their informal poll of prominent cryptocurrency community members; for example, Ubiquity CEO Nathan Wosnak forecast $777 for the 1st of January, whereas CCEDK CEO Ronny Boesing shares a more modest prediction of $275-$325.
Renegade Investor Makes the Case for an All Time High in 2016
Financial blogger ‘Renegade Investor’ makes the bull case for the value of BTC well in this 14 minute YouTube video. Although the content of the video itself is a broad fundamental analysis which doesn’t go as far as forecasting specific value levels, its maker believes that a confluence of factors will come together to push the price past its previous peak to break new all time highs.
The Great Halving & Other Common Themes
A relatively small number of common themes, most of which you will already have encountered if you watched the video above, run through the majority of forecasts. Perhaps the biggest of these is the halving of the block reward for miners.
The halving of the block reward, expected to occur sometime in mid-2016, will halve the number of newly generated coins. Most commentators will point to the laws of supply and demand to argue that a reduction in the rate at which new coins are issued should be expected to have a positive impact on price. This is not a certainty, however, and is actually one of the few areas in which I have been able to find voices dissenting from the overwhelmingly bullish analysis. For example, this article from Inside Bitcoins points out that the supply itself is not decreasing, only the rate at which the supply increases, and that miners may be forced to sell more coins in order to cover their costs.
Other commonly cited drivers for next year include a flight from high inflation in emerging economies, especially Latin America, and the far-from-resolved sovereign debt and banking crisis in Europe. Another popular theme is expressed best by ZeroHedge, which attributes the recent breakout and renewed bull market to Chinese capital controls and speculates that this, along with the potential for a new oriental banking crisis caused by property loans going bad could drive further increases.
Many commentators also point to the record venture capital investment in Bitcoin start-ups in 2014 and 2015 as a possible driver to growth in the number of bitcoin users during the course of the next year, as many of these firms begin to ‘come of age’ and reach out to acquire new customers.
Wedbush Securities Raises 2016 Target to $600
Wedbush Securities is one of the only traditional investment firms which regularly publishes an in-depth analysis of this market. Most of the analysis you can find on the internet comes, in some way or another, from within the Bitcoin community – and therefore from people you may claim have a vested interest, and arguably a tendency towards positive bias in their opinions. The status of Wedbush as an established firm with a successful history within traditional markets, as well as being an ‘outsider’ immune to the kind of permabull optimism of the true believers, makes them an influential voice when it comes to forecasts.
In June, when BTC was trading at around $270 USD, Wedbush published an interesting report which placed the main influences on current price movements within the context of long term market drivers reaching out as far as 2025. At that time the company also issued a $400 target price for 2016.
In November, Wedbush released an updated report with a revised target of $600.
Roger Ver, a well known investor and advocate for Bitcoin has said that he expects the price to go up in 2016, but also that he expects there to be higher volatility.
Meanwhile Digital Currency Group (DCG) founder Barry Silbert used an investor presentation to outline 10 predictions for Bitcoin in 2016, including industry consolidation, a proliferation in non-financial uses of blockchain technology, growth in Brazil, China and the Middle East, and the possibility of another speculative bubble.