Anthony ‘Pomp’ Pompliano is doing the rounds. On Wednesday, the Morgan Creek co-founder tussled with stock market skeptic and renowned gold bug Peter Schiff.
Come the end of the week and he’s once again singing Bitcoin’s tune. This time proclaiming that the flagship cryptocurrency is likely to hit $100,000 in a mere 30 months.
Imagine a world where central banks cut rates and print money (yes, it’s called QE) and Bitcoin hits $100K in under 2.5 years time!! @APompliano says it WILL happen. Find out how. ?? pic.twitter.com/dE5blFvDWM
— Julia Chatterley (@jchatterleyCNN) August 1, 2019
And that’s just a conservative estimate. Pompliano believes the effects of an easing Fed and its money-printing antics will coincide with the Bitcoin halving in May of 2020.
The result? A whirlwind of fundamentals that has no other choice but to catapult Bitcoin to $100,000 and beyond.
Extrapolating Bitcoin Out to $100,000
Next year the total number of Bitcoins mined per block will scale down to 6.25 from 12.5. Historically speaking the halving has actually correlated with the beginning of a major bull run and not the end of it. Here’s a chart extrapolating what might happen:
The above projection is obviously not bullet-proof but it does suggest that price fanatics may want to chill out for a while before going all-in. While CNN anchors gasp at the possibility of such a move it pays to remember that Bitcoin is a hyperbolic asset.
Just like its mysterious creator, the king of crypto makes its most prominent moves when
no-one is only the vigilant are looking. As Pomp points out, that means that moving from one order of magnitude (for example 100) to another (1000) will be seamless:
“Well look, in 2017 Bitcoin went up 20x right so its a hyper-volatile asset. We’ve seen it go up 20, 30, 50x at times. We’ve also seen it draw down over 80% now three times.”
Even the Quants Agree
The race to $100,000 is so alluring that even the mathematical geniuses are climbing on board. One quantitative analyst, PlanB, built a stock-to-flow model using Bitcoin data from 2009 to 2012. The model accordingly predicted price targets between 2013 and 2019 with a 99,5% accuracy:
#bitcoin 2012 Stock-to-flow model still works!
S2F model made with 2009-2012 data (only 4 data points, before any halving – green line) correctly predicted 2013-2019 (7 out-of-sample data points + blue line) with 99.5% R2. Current prediction: 2021 $100K, 2025 $1M? pic.twitter.com/NX8djTxrA1
— PlanB (@100trillionUSD) July 18, 2019
Now nothing is a sure thing, but if the model continues to hold, Bitcoin is estimated to hit $100,000 by 2021. And if you have the patience to HODL until 2025 then apparently you’ll be rewarded with a mind-boggling $1 million a coin.
While not specifically referring to PlanB’s model above, Pompliano does point out that Bitcoin’s stock-to-flow is similar to gold but with some additional benefits:
“[Bitcoin] It’s very similar to the stock-to-flow ratio of gold. Right, so there’s existing supply and you go ahead and just continue to add it. The difference is with Bitcoin we know exactly how many are getting created. 1 800 Bitcoin are going to be created today. The second thing is we know the total supply available. There’s 21 million so it’s not hey I wonder how much is in the ground…”
Bitcoin has already started the first half of the year with incredible momentum but can it maintain that pace? Even some skeptics believe that Bitcoin will hit lofty new highs before the year is up.
By any measure, a 10x return in 2.5 years is not bad. Not bad at all.