Pundits and crypto analysts love to issue Bitcoin (BTC) price predictions regardless of how volatile the asset class is.
In 2017, there were calls for BTC’s price to hit $35,000–$50,000, and of course, a few brave souls predicted that the price would top $1 million before correcting.
No one will forget how John McAfee infamously promised to chomp off his genitals if BTC’s price didn’t hit $1 million by 2020.
While some of these lofty estimates are based on fundamentals, others are entirely baseless. Regardless of the analyst’s rationale, a handful of them are so far removed from reality that they have become memes.
Let’s review the most outrageous Bitcoin price predictions of 2020.
“Guesstimation” attracts attention because nobody follows them up
Guessing the future price of cryptocurrencies is so embedded in the community that many analysts don’t even consider evaluating their effectiveness. Keeping up with the endless flow of predictions issued on blogs, podcasts, Twitter and YouTube is almost impossible. Imagine the difficulty and energy it would take for a person to follow up with all these random guesses.
To further complicate matters, some of these predictions come from well-known Bitcoin bashers, such as renowned gold bug Peter Schiff, and New York University Stern School of Business professor Nouriel Roubini. Thus, in some cases, personal credentials sometimes matter less than working analytical models.
A month before the March 12 crash, which saw Bitcoin’s price plummet 50% to $3,750, PlanB, the creator of the stock-to-flow model stated that Bitcoin would not return below $8,200. At the time, no one expected the Dow Jones equities index to face its most significant drop since 1987, neither the WTI oil future contract dropping to negative $40.
Despite the outlandish claim, PlanB won’t be nominated to 2020’s worse predictions because hardly anyone expected the coronavirus pandemic to impact the markets in a way that would cause absolute havoc. Furthermore, famous chartist Peter Brandt also made the same error when he said that BTC would never revisit the sub-$6,000 level in January.
CryptoWhale’s quantum model calls for $24,000 BTC in mid-2022
On June 2, 2020, Twitter analyst CryptoWhale revealed a new “quantum” model that would predict Bitcoin’s price. According to CryptoWhale, the model had “effectively predicted every major move since 2018.”
Things could not have gotten worse as the model predicted both a $2,000 bottom in 2020 and a “proper bull run to $24,000” only in mid-2022. Somehow, the quantum particles, molecules and atoms that were supposed to make it more accurate were, in fact, pure blasphemy.
Two lessons that can be taken away from the “quantum model” are: (1) Having a ton of social network followers doesn’t necessarily translate to better price estimates, and (2) complex models are prone to the same errors as humans. Evaluating a new asset class during a period of desperate central bank monetary easing is far from easy.
Ross Ulbricht predicts nine months of downside after Black Thursday
In April, Ross Ulbricht, the founder of the now-defunct Silk Road darknet market, wrote that Bitcoin’s volatility — particularly the March 12 bloodbath — would most likely lead to a bear market, which could last for three to nine months. At that time, Bitcoin had been hovering around $7,000 and was clearly still affected by the recent 50% intraday correction.
Precisely 17 days after that blog post, BTC soared over 30% to $9,000, thus completely invalidating Ulbricht’s analysis. To further show how far off that analysis was, Ulbricht added that a $14,000 bull run was “very unlikely.”
During Ulbricht’s so-called bear market period, Bitcoin’s price rallied more than 300% from December 2018 to June 2019. Furthermore, calling for such a lengthy correction doesn’t align with Bitcoin’s historical data because even during the darkest period of December 2019, Bitcoin’s price remained more than 100% above the previous year’s lows.
Gavin Smith says Bitcoin will close 2020 at $7,000
During a July 27 interview with Forbes, Panxora CEO Gavin Smith said that he expected a $7,000 Bitcoin price by the end of the year. Gavin further added that “a short term washout this year before the true rally takes hold.”
Panxora’s CEO explained that despite the appreciating tendency caused by inflation hedge, the broader impact of demand shock on the economy would potentially drive BTC lower.
This estimate happened after 80 days of Bitcoin’s price consolidating around $9,500. At the time, despite rising 100% from mid-March lows, there was still some doubt about BTC’s ability to break the $10,000 resistance.
Antoni Trenchev calls for $50,000 Bitcoin price in 2020
On Jan. 3, 2020, Nexo co-founder Antoni Trenchev stated that BTC could easily reach $50,000 in 2020.
Besides an overly optimistic estimate, the rationale behind it doesn’t seem to fit. According to Trenchev, Bitcoin had become “the new gold,” and he pointed to the lack of correlation to traditional markets as a potential catalyst.
As shown above, gold traded in tandem with traditional markets for the larger part of 2020, but it should be noted that these asset classes have different volatility. Thus, oscillations in equities tend to be much stronger. Nevertheless, the overall direction of both markets until November has been very much alike.
This price movement creates the impossible task where BTC is expected to act as “the new gold” while simultaneously presenting a lack of correlation. This estimate went doubly wrong for missing its year-end target by a wide margin and also failing to correctly estimate gold’s correlation to traditional markets.
Now that Bitcoin’s price is a mere 7.4% away from $30,000, it will be even more interesting to see what type of extravagant bullish and bearish price estimates are issued for 2021.
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