Random Thoughts
Got to have some FUN
Alright, so a few of us were randomly talking about all things crypto. Obviously price of BTC always comes up and we all begin to talk about what we could have done if we have known..... the age old story. So someone started saying BTC is like an elevator. You get in, you go to the Penthouse suite, and then you come to the Lobby. So this someone is actually @reazuliqbal :) So he changed his discord handle to "When Lobby". I thought I should take a look at the longer term BTC chart and see if that is true. I pulled up the monthly and observed that is NOT true :) You never go down to the lobby!
Basically the way I read this longer term chart is that the Lobby was at the $100 level in 2015. We went up to the Penthouse in late 2017. In the early 2019 we reach something that you may want to call a Mother-in-law quarter somewhere in the middle around $3000 or so, then we rallied back up towards the Penthouse again. Didn't quite reach it, and dropped to a Covid low in March of 2020, which I call an Unplanned Doctor's Visit to honor @simplifylife. And then we are reaching for a higher Penthouse. Yep, you can always have a higher Penthouse!
So the million dollar question is When Lobby? If I say the Lobby is $100, I have to say NEVER. This is simply because BTC is not an inflationary asset. It is a dwindling non-renewable resource. There is only 21 Million possible BTC and 18.6 Million of them are mined already. That means only less of 12% of it is left to be mined.
Mining BTC is now a specialized industry and there is no way an individul can mine BTC anymore. Most of the mining is done my mining pool in far away places where electricity is cheap.
144 blocks per day are mined on average, and there are 6.25 bitcoins per block. 144 x 6.25 is 900, so that's the average amount of new bitcoins mined per day.
All individuals can be is to take a small part on a pool, but even that is not profitable anymore. So fact is this is a dwindling resource that we all like, so fundamentally speaking it gets rarer and rarer with each "halving" incidence, and mining gets more and more difficult
New bitcoins are issued by the Bitcoin network every 10 minutes. For the first four years of Bitcoin's existence, the amount of new bitcoins issued every 10 minutes was 50. Every four years, this number is cut in half. The day the amount halves is called a "halving" or "halvening".
In 2012, the amount of new bitcoins issued every 10 minutes dropped from 50 bitcoins to 25. In 2016, it dropped from 25 to 12.5. In the most recent May 11, 2020 halving, the reward dropped from 12.5 to 6.25 BTC per block.
In the 2024 halving, the reward will drop from 6.25 BTC per block to 3.125 BTC. Since each halving lowers BTC's inflation rate there is fundamentally no way to make BTC go down (as long as the demand stays the same). In reality the demand will only increase (this is a speculation, but a reasonable one, considering the dovish monetary policies of all the cental banks of the world).
Looking at the the plot above and considering the monetory policy of the world, I don't see how the price can go down for a sustained period of time. Sure it can drop to $10,000 for an year or two, may be even $6000, or may be even to $3000, to the mother-in-law quarter but that will be mostly temporary.
Disclaimer: This is NOT professional advice, this is all just my own opinion and experience. I am NOT a Certified Financial Adviser. Consult professionals for any financial, accounting or legal related questions you have.
Charts are created in Tradingview.com, which is a free service.
Posted Using LeoFinance Beta
