Bitcoin in 2017_ a currency devaluation hedge for emerging markets – coindesk

In this opinion piece, Lingham gives an overview of bitcoin’s recent positive performance, predicting a $1,000 bitcoin before the year’s end, and even a $3,000 bitcoin by 2018.

This is the first time this has happened since 2013, as I had forecast in that blog post. When to invest in gold coast But to be even clearer, I said that it would hit $15bn market cap this year, which I’m pleased to report officially happened today when the price breached $934.

As much as I enjoy the attention, and the emergence of nicknames such “Bitcoin Oracle” (Thanks to TwoBitIdiot for coining it!), I do feel the need to make a point of two things, in particular.

Firstly, I don’t have a crystal ball, and everything I say has a certain percentage chance of either occurring or not occurring – we live in a probabilistic world, so when I make a call, it’s because I think the outcome is highly likely, but that does not always mean it’s certain.


Secondly, I’m a macro guy , with a big picture focus. Should i invest my money in gold I don’t look at the trading charts every day (I just don’t have the time!) and even though I don’t actively trade anymore, I do understand things like leverage, slippage and liquidity in markets quite well. How to invest in gold with little money I don’t do technical analysis, as macro factors will shift the playing field and disrupt the charts, so in my opinion, they are often best used for looking back, and not forward.

Most of my calls are based upon fundamentals that I observed from my working knowledge of capital flows, supply and demand and other fundamental perspectives on economics, psychology, money, business, game theory and a host of other subjects – including life experiences and the differences between living in South Africa and the US (capital controls, hyperinflation leading to Zimbabwe’s currency collapse, high interest rate environments, etc).

If you have read my prior posts, you will find this to be the case when I lay out fundamentals for why I believe things in the bitcoin world will play out the way I forecast or suggest.

This is not wizardry or crystal ball stuff, it’s just observations that I have made from analyzing lots of disparate data and information derived from multiple sources and then trying to figure it all out.

The first is largely due to the macro economic factors – demonetization in places like India and Venezuela, geopolitical concerns over the Trump election and most importantly but most misunderstood, the recent Fed rate hike (which puts pressure on emerging market currencies, strengthens the dollar and creates a surge in the forex/BTC trading).

The second factor is that after the $800 price mark was breached, there was a hollow supply interval between $800–$900 (ie: there were not a lot of sellers, for various reasons which would take too long to explain in this post).

We will most likely find a potentially short period of consolidation around the low $900s, before we start testing the four-digit barrier, possibly with one or two mini spikes to the mid $900s and then a sell off back into the upper $800s/low $900s as the market finds its feet.

There is also the year-end impact of profit taking around 31st December, but I don’t expect it to be outside these ranges. Invest in gold hdfc Dollar interest rate hikes

Essentially, the higher the rates go, the higher the demand for bitcoin will be. When to invest in gold The divergence that you see is happening because gold has been heavily favored by gold bugs for historical reasons (in times of crises, etc) as the go-to commodity based store of value if an economic collapse happens. Should i buy gold or silver This was often followed by a period of low interest rates and then inflation.

As a result, gold is still overvalued, especially if the Fed now continues to raise rates, which I expect will occur. Is it good to invest in gold in 2015 Bitcoin will rise with an interest rate hike because unlike gold, there is further upside in the capital value of bitcoin, so the need for some type of yield to offset it is greatly reduced.

When the Fed raises rates, emerging market economies have their currency devalued, which raises the effective price of bitcoin for people in those markets, creating more equity value in their bitcoins and driving up demand for more.

This is because the price to mine a bitcoin is largely uniform (electricity price aside) in every country in the world, as it’s a commodity that trades freely across global markets (labor input costs are not germane to bitcoin, unlike gold).

If your currency devalues, it just costs you more to mine a bitcoin or buy a bitcoin. Should you invest in gold now The market doesn’t care how your currency is performing. Can i buy gold in my ira Counterarguments

Some would argue that bitcoins don’t provide yield similar to gold and therefore should be subject to the same price pressures that impact the precious metal as interest rates rise.

But, the reality is that the current market capitalization of bitcoin is fractional to gold and so, for the time being, the expected capital appreciation of bitcoin heavily discounts the need for a yield curve right now. Why to invest in gold This may change in the future.

To expand on Fed monetary policy a bit more, the world has been on a dollar-based debt binge for assets and equity over the past eight years, with record low interest rates, which partially explains the negative interest rate policy (NIRP) in some countries (watch RealVisionTV.com for more detailed info here).

When rates rise, entities (corporates or governments) have to then make interest rate payments in USD and, to do that, they then have to sell local currency. How to purchase paper gold in india This in turn further weakens the local currencies – effectively trying to close out a dollar short position on a regular basis.

This is over and above any unwinding of carry trade positions that are no longer profitable with higher cost dollars, and so a vicious cycle ensues. Is it good to invest in gold etf now Bottom line is that rate hikes devalue foreign currencies and strengthen the dollar.

This is particularly visible in countries where entities with local currency earnings have been financing dollar-denominated debts without sufficient dollar-based income.

Bitcoin is seen to be gaining in local currency price trading pairs, which makes it far more desirable and in effect increases demand, because of upward price momentum in those currencies which creates more demand for bitcoin. How to invest in gold mines $3,000 ahead

Without a doubt, bitcoin will rise further next year – I expect to be within the $3,000 range by the end of next year, as I have previously forecast.

Overall, I would compare the last price spike in 2013 to $1,255 as being “irrational exuberance,” similar to the peak of the dot.com bubble – so I don’t expect another one like this again, but I could be wrong.

Similarly, the tech world eventually crushed those “bubble” highs once the technology and businesses matured and built towards higher and even more sustainable highs, post 2000.

Since the previous high for bitcoin, it has been over three years. Why not to invest in gold A lot has changed since then, and I will write a follow-up post which expands on some of the topics above in greater detail, but for now, I will summarize my expectations for next year. Why invest in gold now 2017 for bitcoin

Looking ahead, we can expect reasonably low volatility for bitcoin (maybe a couple of dips here and there), a steady pace of growth, broader industry use cases and applications for bitcoin, and the adoption of Segregated Witness (SegWit) to handle scaling.

My company, Civic, is building out a blockchain-based identity platform and I’m very excited about the prospects of using a public ledger for global identity management (and no, we don’t store your personal info on the blockchain!).

Also likely is the government sponsorship or endorsement of bitcoin-related companies and more likely, government-led buying of bitcoins or investment into bitcoin mining companies or similar.

Potential government crackdowns on bitcoin in certain countries, due to capital flight or loss of exchange controls could be seen as well. How to invest in gold bees etf india But, this will drive up the bitcoin price in the black markets in those economies.

This may result in bitcoin prices in other currencies being up 4x to 7x, but I think it’s fair to say that USD/BTC pairing is what we should use as the benchmark.

Consumer adoption will still trail, and I don’t believe we’re going to see mass adoption of bitcoin as a currency of any sort by average consumers. How to invest in gold coins I would still argue that bitcoin is a commodity today, not a currency. How much should i invest in gold That will change in time.

This article originally appeared on Medium and has been republished with the author’s permission. Is it good to invest in gold now The piece is not intended to be, and should not be taken as, investment advice.

Disclaimer: The views expressed in this article are those of the author and do not necessarily represent the views of, and should not be attributed to, CoinDesk.