From roughly the second quarter of 2020, Bitcoin’s price has been trending either sideways or upwards. Following a slow and steady accumulation over most of the year, late 2020 saw the commencement of a dramatic bull run which has brought Bitcoin to record high prices, approaching the $50,000 level at the time this article is being updated.
Many observers noticed the building pressure during 2020 and made their bullish Bitcoin price predictions, but at the same time, there were also a lot of bearish predictions. So how can you distinguish the good calls which can help you to get positioned the right way in a market as unpredictable as Bitcoin, from the terrible calls that cost you money?
One example of a bullish prediction was made in 2020 by that outlandish character, John McAfee. McAfee, the creator of the eponymous anti-virus software, got involved in crypto around 2017 and soon began making wild and often baseless claims on the subject. McAfee went so far as to make a thundering Bitcoin price prediction of $1m for the end of 2020. Of course, that didn’t happen but what did transpire was McAfee’s arrest for tax evasion in October of 2020.
Macafee’s 1 million was a bold statement regarding an asset that at the time was barely above 8,000 USD, and whose highest price until then was 20,000 USD, reached almost two years ago. Yet McAfee insisted that the scarce nature of Bitcoin, the hard cap on its limit, and the fact that a good chunk of the Bitcoin out there is likely lost for good due to misplaced private keys, would all conspire to produce explosive growth. McAfee got the direction right but his number – like much of his behaviour – was likely calculated more for drawing attention than accuracy.
McAfee isn’t alone in his bold Bitcoin price predictions though. While other analysts are more conservative, many of them _ still bet big. The German bank, Bayer LB, predicted in October of 2019 that the price would reach 90,000 USD before the halvening which occured in May of 2020. Again; right direction, hugely over-optimistic number. And Simon Peters, an analyst at eToro who predicted earlier in 2019 that Bitcoin could hit 50,000 USD before year-end, said the dip is simply a bump in the road and will spur investors to buy low, thereby pushing the price back up.
Of course on the other side of the (bit)coin, there are predictions that the BTC price will continue to drop. Peter Schiff, a famous pro-gold economist and Bitcoin skeptic, best-known for calling the 2008 housing crash, made a bearish Bitcoin price prediction of 4,000 USD, around the time BTC in late 2019 when Bitcoin was trading at twice that price. Schiff’s prediction was eventually borne out, as in March of 2020 Bitcoin did indeed trade down to the $4,000 range, during the so-called Coronavirus crash… However, BTC’s price only languished in those doldrums for a week or two before rebounding and beginning its greatest ever bullrun.
What all these predictions show is that it’s easy to be correct in your Bitcoin price prediction if you leave the timeframe open-ended. McAfee’s wild $1m could happen, given enough time. And Schiff’s really negative prediction did come about but, rather than signalling the death of Bitcoin as Schiff and countless Bitcoin obituaries foretold, that low price represented one of the greatest buying opportunities seen in market history, as anyone who got in at $4,000 is now up 11 or 12 times in less than 12 months.
With so many conflicting predictions, how do you know which to trust? After all, if the BTC price is on its way to 1 million USD, then now is the time to buy. But if the Bitcoin price is heading down again, then it’s better to hold off.
How to know which Bitcoin price predictions to trust
The short answer, unfortunately, is that you can’t know which Bitcoin price predictions to trust. While most analysts are basing their predictions on years of market experience and observations of known patterns, they’re still just guessing. Some of those guesses may be more educated than others, but you can’t really predict the market with complete accuracy. If that was easy, we’d all be rich.
There are, unfortunately, too many factors that go into the Bitcoin market. We’ve talked before about some of the factors that affect the market, which include hype; new products, features, and partnerships; and large-scale crimes, but many of those factors are unpredictable. You simply can’t know when someone will hack an exchange and steal billions of dollars worth of Bitcoin, when a Bitcoin whale will decide to move enough coins that it will shift the market, or whether the hype around a new product will actually materialize. But there are some things you can do to make more educated guesses:
- Read, read, and read some more. Familiarize yourself with market patterns, read the price analyses and see which predictions are most often correct, know which products and partnerships are coming out, read about them, and form your own opinions.
- Take most things with a grain of salt. It’s no secret that people who speak loudly and optimistically about Bitcoin are often invested in Bitcoin or – like Schiff whose company sells gold – invested in competing assets. In other words, it’s in their own best interest for the Bitcoin’s price to follow their prediction. That’s not to say they’re wrong, it’s just important to remember that they’re not necessarily neutral, and may be trying to influence markets to follow a direction which benefits them.
- Don’t be scared by sudden shifts. It may be tempting to sell off your entire Bitcoin investment each time the price drops by 1,000 USD in an hour, or to start buying aggressively when it spikes – or conversely to buy when price dips and sells when it spikes – but these big shifts are usually temporary. It’s impossible to time every dip and swell to buy and sell at the right time. Make a long-term plan and stick to it.
At the end of the day, we won’t know unless it happens if John McAfee’s Bitcoin price prediction will ever come true, or if Peter Schiff and other naysayers are right that BTC’s price will ultimately go to zero. Both predictions are fairly extreme, and both made by people lacking any real crypto experience or insight. If you’re looking for Bitcoin price predictions which are more likely to be accurate, then it’s better to only pay attention to people who are experts in the technology or have achieved long-lasting success in the industry. Even better is to sample a range of predictions by such people and figure out some sort of average view; of course you must only select predictions with roughly-matching timeframes which match your own investment horizon.
An ever better idea is to educate yourself to the best of your ability, as that will help you to decide whose market view has credibility and whose doesn’t, as well as to make your own best Bitcoin price prediction.