Hedge fund manager Mark Yusko has attracted a lot of attention for his long-term Bitcoin price prediction of $1 million, a stark contrast to the attacks coming from other corners of Wall Street.
The story has unfolded, in part, on Twitter…
"Only gamble was whether Bitcoin would make if [sic] from $0 to $100, that was the real miracle. Going from $4,000 to $40,000 or $400,000 is easy," Yusko, the founder and CEO of Morgan Creek Capital Management, tweeted Sept. 18.
A month later, Yusko responded to a question asking for a Bitcoin price target. He simply tweeted, "$1,000,000 (long-term)."
The tweets show Yusko sees a $1 million Bitcoin price prediction as a "best case" and $500,000 Bitcoin price as a "conservative base case," both over a time frame of 10-plus years.
Meanwhile, Wall Street figures like JPMorgan Chase & Co. (NYSE: JPM) CEO Jamie Dimon and Ray Dalio, founder of the Bridgewater Associates hedge fund, have been trashing Bitcoin as a dangerous bubble.
But Yusko has remained adamant. The reasons he cited on Twitter for the big Bitcoin gains he's predicting are "store of value," "gold equivalence," and "network effect."
The first two are fairly straightforward, but the network effect is particularly compelling in the case of Bitcoin.
It's the basis not just for Yusko's optimism, but a number of Bitcoin price predictions…
A Bitcoin Price Prediction Based on Users
It's more formally known as Metcalfe's Law. It was named after Robert Metcalfe, who co-invented the Ethernet networking protocol. The law states that the value of a communications network grows exponentially as more users connect to it.
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The idea is that the utility of the network increases exponentially as the number of people connected to it grows.
This was demonstrated with the original telephone system. Having a phone in the house was of limited use in communicating with others when few people owned them, but indispensable once nearly everyone had one.
FundStrat co-founder Tom Lee has applied an adaptation of Metcalfe's Law to Bitcoin that puts the digital currency in a range between $20,000 and $55,000 in five years.
Metcalfe's Law also applies to the stunning rise of Facebook Inc. (Nasdaq: FB).
In its early days, back in 2004, Facebook had about 1 million users and was valued at approximately $5 million dollars. By 2006, Facebook had 12 million users and was valued at $1 billion. By 2010, the social network had over 600 million users and was worth $56 billion.
At the time of its IPO in May 2012, Facebook had 900 million users and was valued at more than $100 billion. Today Facebook has 2 billion users and has a market cap of $522 billion.
Tim Peterson, the founder of and portfolio manager for Cane Island Alternative Advisors, wrote a blog post in September in which he showed how the trajectories of Facebook and Bitcoin have followed Metcalfe's Law.
The chart shows the path of both Facebook and Bitcoin from inception, with Facebook five years farther along. Should Bitcoin follow Metcalfe's Law as Peterson envisions, the Bitcoin price will reach $20,000 in 2019 and $48,000 in 2022.
While that still seems a long way off from $500,000 to $1 million in 10 years or so, recall that Facebook's valuation rose by a factor of 10 from 2010 to today.
It's also important to remember that projections based on Metcalfe's Law depend on user adoption, not time.
And Bitcoin is at a very, very early stage when it comes to user adoption…
Why the Bitcoin Price Will Go Parabolic When It Goes Mainstream
About the Author
David Zeiler, Associate Editor forĀ Money MorningĀ at Money Map Press,Ā has been a journalist for more than 35 years, including 18 spent atĀ The Baltimore Sun. He has worked as a writer, editor, and page designer at different times in his career. He's interviewed a number of well-known personalities - ranging from punk rock icon Joey Ramone to Apple Inc. co-founder Steve Wozniak.
Over the course of his journalistic career, Dave has covered many diverse subjects. Since arriving atĀ Money MorningĀ in 2011, he has focused primarily on technology. He's an expert on both Apple and cryptocurrencies. He started writing about Apple forĀ The SunĀ in the mid-1990s, and had an Apple blog onĀ The Sun's web site from 2007-2009. Dave's been writing about Bitcoin since 2011 - long before most people had even heard of it. He even mined it for a short time.
Dave has a BA in English and Mass Communications from Loyola University Maryland.
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So you want to know why I think the Money Pro's are all wrong when it comes to Projecting Bitcoins' value in the Next 10 years…. ? And infact will be 10x HIGHER…!
Because the closest Business law or market projection principal anywhere close to predicting a financial movement like this is the McCalfes Law…. (read the entire article) but the only Exponential growth case study we have to base it on is the Facebook phenomenon…. which will give you an Extremely conservative 10 year evaluation for the obvious X factor that I haven't heard any Financial Pro talk about…is that adoption of service is what brings the system it's value…and your comparing Apple's to Oranges here…. Bitcoin is not a community where people can share theor stupid Ducklip selfies or what their about to shove in their pie whole…. this is a world wide platform where anyone can transfer their "CAPITAL" in and almost instantly earn "Capital Gains" higher than in any 401k or IRA or even one of the Best Top performing Blue Chip Mutual funds…!!! C'mon guys…once this hits main stream… it's Gonna go Viral Bigger and Faster than any of your most Favorite stupid Cat videos or worldstar fighing clip….! Why….? Because GREED IS THE MOST POWERFUL MOTIVATION IN THE WORLD….! PERIOD….! And nobody in there right mind is going to NOT INVEST IN BITCOIN…..! So the question is Not if you will invest in Bitcoin….the question is WHEN WILL YOU….. AND SOONER IS ALWAYS BETTER THAN LATER…… !!
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