Realistic Bitcoin Price Prediction 2021/2022

I see all kinds of Bitcoin price predictions for 2021 thrown around, but few of them have any substance.

I will do my best to keep things objective and level headed, and base my predictions on historical data and models.

The price of Bitcoin will reach $100 000 in 2021/2022. This is the price predicted by four independent models and methods: The Stock to Flow model, The Logarithmic Growths Curves, The Fair Value S2F Model, and the diminishing ROI from each cycle.

In this article, we assume that Bitcoin will peak at the end of 2021 – meaning that we subscribe to the four-year cycle.

Content:

  • What Institutional Investors Predict
  • What Retail Investors Predict
  • The Logarithmic Growth Curves
  • The Stock to Flow Model
  • The Fair Value S2F Model
  • The ROI of Previous Cycles
  • Predicting Bitcoin Using Gold and U.S. Dollar Market Cap

What Institutional Investors Predict

According to CNBC, JP Morgan has predicted a Bitcoin price of $146 000, and they’re not alone.

I did some research and put together a table showing the different predictions made by authority figures in the financial markets:

Predicted Bitcoin PriceCompany / PersonSource
$146 000JP MorganCNBC
$300 000CitibankCitibank
$115 000Pantera Capital Cointelegraph
$100 000Anthony Scaramucci (SkyBridge Capital)Marketwatch
“Bigger than Apple or Amazon”Cathy Wood (Ark Invest)Finance.yahoo

It’s eye-opening to see big institutions like Citibank think that Bitcoin will reach $300 000 within 2021. They actually sent out a report containing their research on Bitcoin. This report was intended for their clients – other institutional investors, but it got leaked to the public.

Also, the fact that JP Morgan, who for several years spoke badly about Bitcoin, came out with a prediction of $146 000, shows how much Bitcoin has changed in the eyes of institutional investors.

Their predictions vary quite a bit, making it hard to land on a specific price prediction. However, it tells us something about what’s reasonable to expect, and what’s within the realm of possibility for Bitcoin in 2021.

Surprisingly, retail investors (normal people like you and me) are more conservative than the big players:

What Retail Investors Predict

I asked around in a couple of Facebook groups, and my newsletter subscribers, and this is what the 200+ people who answered predict:

Predicted PricePercentage of Votes
Below $100 00027.6%
$100 00040.9%
Over $100 00031.5%

The predictions I got from retail investors ranged from $66 000 all the way up to $500 000.

However, we see that the most popular prediction from retail investors is that Bitcoin will hit $100 000 in 2021.

As we will see, this number is supported by several Data-science models and historical patterns from previous cycles:

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The Logarithmic Growth Curves:

Below you see a chart of Bitcoins price ranging within a band. It shows the long term trend lines that all previous peaks have reached:

Bitcoin logarithmic growth curves prediction

As you can clearly see, all the peaks of Bitcoin has gone up to the top of this band, and it’s reasonable to assume the next one will do the same thing.

If we hit the top of the band in the end of 2021, the price of Bitcoin will be around 100 000 USD. Which is in accordance with what retail investors predict.

However, it’s way to soon to draw any conclusion. Let’s look at some more models:

The Stock to Flow Model (SF)

The Stock to flow model is one of the most popular models in the Bitcoin community. It was made by PlanB; a Bitcoin evangelist who has preached the Bitcoin gospel for years.

The Stock to flow is a metric usually used on stuff like gold and silver, but it’s applicable to Bitcoin as well.

The Stock to Flow model predicts the price of Bitcoin based on scarcity. It looks at the market value of commodities like Gold, Silver and Platinum, as well as their respective stock to flow, and uses this information to model the price of Bitcoin, based on Bitcoins stock to flow.

“Ehhh, what…?”

I know this might sound boring, but hear me out:

Stock to flow is a number that tells us how long it will take to double the supply of Bitcoin, at the current rate of bitcoin mining.

Basically, it tells us how much new Bitcoin we mine vs. how much Bitcoin there already is.

It’s tells you the ratio between how much new Bitcoin is being mined in a year and the already existing Bitcoin.

A Stock to Flow of 10 means that it would take miners ten years to double the number of Bitcoins in circulation.

A high stock to flow is good, as it means that the asset is more scarce, and scarcity drives the price up.

The good news is that the stock to flow of Bitcoin doubles every four years due to something called “the halving”.

The halving cuts the number of Bitcoins that miners earn in half every four years, halving the production rate of Bitcoin, and therefore doubling the stock to flow.

Sounds trivial, but the stock to flow is actually one of the cornerstones of Bitcoin value.

PlanB tried to predict the future price of Bitcoin by modeling the price after it’s stock to flow.

Below you see the model that PlanB made. It shows the price and the stock to flow (Source: lookintobitcoin.com):

Bitcoin price prediction 2021 stock to flow
The colorful dots are the price of Bitcoin. The line is the predicted price based on the stock to flow. The color of the dots tell us how many days the next halving is into the future (right vertical axis). You see the price in USD on the left vertical axis, and the time measured in years on the bottom horizontal axis.

As you can see, the predicted price of Bitcoin by this model is 100 000 USD.

Both the SF and the logarithmic growth curves predict the same thing. This is great, but it’s still to soon to draw any conclusions.

(Read more about the Stock to Flow model here: How the Bitcoin Halving Effects the Price of Bitcoin)

Let’s dive deeper.

The Fair Value S2F Model

I modeled the fair price of Bitcoin based on it’s stock to flow, and it’s future halving. My work resulted in the model you see below:

Fair value of Bitcoin

How to Read This Model:

1)
The green dashed line is the “fair value” of Bitcoin, or what the Bitcoin price should be in a rational market.

2) If the Bitcoin price is below the white line, Bitcoin is “cheap”, or “over-sold”

3) If the Bitcoin price is above the red line, it’s “expensive”, or “over-bought”

This model shows that the fair value of Bitcoin will reach $100 000 in the summer of 2022. However, each time we have peaked in the past, we have ascended way above the fair value line.

This model indicates that we will reach the $100 000 – $150 000 range if we peak at the end of 2021.

This model is actually useful for more than predicting the future price:

It tells you how risky it is to invest in Bitcoin at any given time. It shows how cheap/expensive Bitcoin is right now.

Learn more about The Fair Value S2F Model.

The ROI of Previous Bitcoin Cycles

For those of you that don’t know; Bitcoin moves in cycles. The price of Bitcoin has followed a pattern ever since it was created. This is largely due to the halving which happens every four years.

This allows us to predict, with reasonably high probability, what will happen in the future.

So what does the past tell us about the future?

The ROI of each cycle is decreasing to 1/3 of the last cycle.

This means that if Bitcoin 1000x’ed in the previous cycle, we’ll se a 333x in this one.

The return on investment, in this case, is calculated from the price of Bitcoin at the point of halving to the peak of the cycle.

The Bitcoin price did approximately 33x in the last cycle, from halving to peak. The price we had at the most recent halving was $10K. Given the ROI of 1/3 of 33 = 10, the predicted Bitcoin price is, you guessed it, 100 000 USD.

Below you see the Bitcoin price chart. The big yellow vertical lines are the halving events happening every four years. I’ve added a prediction of the ROI for this cycle, assuming that it will be 1/3 of the last one:

Bitcoin price prediction ROI

As you can see, this pattern predicts 100 000 USD.

We’ve now looked at four independent models/charts. They all seem to be pointing in the same direction. in addition, retail investors predict the same thing.

(Suggested reading: Ethereum Price Prediction 2021)

Our Bitcoin Price Prediction for 2021

All the models we’ve looked at, as well as the pattern we see in the decreasing ROI from cycle to cycle, point to the same number – $100 000.

Also, retail investors think that $100 000 is the number we’ll see Bitcoin climb to.

This gives the prediction weight, as they all strengthen each other.

None of the above methods of predicting the Bitcoin price are sufficient on their own to create a realistic Bitcoin price prediction for 2021, but together they are strong in a synergic way.

If our prediction relied on only one model, it would be pure speculation.

However, having four different, independent and legit models/charts point to the same price, as well as the majority of retail investors predicting it, now that’s more reliable.

For this reason, I will conclude with this:

Bitcoin, according to four independent models/charts, as well as retail investors in general, will reach at least 100 000 USD by the end of 2021.

According to big institutions, this is rather conservative, with most of their predictions closer to $150 000 by the end of the year, some going all the way up to $318 000.

That’s my official conclusion – at least $100 000. However, there are other ways to predict the future price of bitcoin: comparing it to similar assets:

Alternative Methods to Make Bitcoin Price Predictions

Creating our Bitcoin price prediction of $100 000 we looked at models and charts exclusively, however, there are other factors to keep in mind:

Institutional adoption and mainstream acceptance of Bitcoin.

We have seen companies like Micro Strategy and Tesla buy huge amounts of Bitcoin. This affects the Bitcoin price to a great degree, and is reason enough to push the prediction higher.

The problem is that it’s hard to put a specific number on how high this pushes the bitcoin price in the future.

It’s not like Tesla buying will “exactly double, or triple” the potential price peak. No one knows how to take events like these into consideration when making a price prediction.

However, we know that they are bullish (optimistic). They will, without a doubt, make the price reach a higher level.

My Bitcoin price prediction of $100 000 therefore seems to be on the conservative side.

One way people like to predict the price of Bitcoin, given the institutional adoption, is to compare it to other assets like gold:

Bitcoin Price Prediction by Comparison to Gold and USD:

Over the last few years, the “function” of Bitcoin has been discussed a lot. Is it e-cash? Is it criminal-cash? Is it e-gold?

Most people, together with major institutions like banks and hedgefunds, agree that Bitcoin functions best as a gold-like asset – a store of value.

It’s not meant to be what you buy groceries with, it’s what you’re supposed to invest in
not to lose purchasing power over time due to inflation.

Recently, we’ve seen a lot of “gold bugs” (people who love gold) move over to Bitcoin.

We have also seen a decrease in demand from normal people (retail investors) when it comes to gold, and an increase in demand for Bitcoin.

According to JP Morgan, institutions are also switching from gold to Bitcoin. (source: https://news.bitcoin.com/jpmorgan-gold-etfs-bitcoin/)

This has caused people to ask the question:

What if Bitcoin reached the same market cap as gold?

The same question can be asked in regards to the U.S. Dollar, let’s explore this way of predicting the Bitcoin price:

Market Cap of Gold and U.S. Dollar Compared to Bitcoin

Below you seethe market capitalization of Bitcoin, Gold and the U.S. Dollar. Bitcoin still has plenty of room to grow:

USD, Gold and BTC Market Capitalization

Bitcoin Price with the Market Cap of Gold

At the time of writing, the market capitalization of gold is $11 000 000 000 000.

If we want to calculate the Bitcoin price, given a market cap of 11 trillion USD, we need only divide the market cap by the circulating supply of Bitcoin:

$11 000 000 000 000 / 18 700 000 BTC = $588 235/BTC

In other words:

If Bitcoin reaches the same market cap as gold, the Bitcoin price will be $588 235

Bitcoin Price with the Market Cap of USD

The market cap of the dollar is currently at $20 trillion.

If we want to calculate the Bitcoin price, we need to do what we did with gold:

$20 000 000 000 000 / 18 700 000 = $1 070 000/BTC

In other words:

If Bitcoin reaches the same market cap as USD, the Bitcoin price will cross the million-dollar mark, and reach $1 070 000

Actually, I’ve written about how, why, and when I believe Bitcoin will reach $1,000,000.


Are YOU Ready?

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When investing in traditional markets like stocks and bonds, there’s not too much you can do to significantly increase your ROI.

This is not the case in crypto markets.

There ARE ways you can significantly increase ROI. I’ve created a free guide on 4 easy ways to increase ROI.

I do all four of them my self, and know for a fact that they can increase ROI with up to hundreds of percent.


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