Thanks for this analysis, Stephen. The underlying assumption implicit in these price projections is that the system of supply and demand that has been driving Bitcoin’s price evolution over the last 14 years continues and no new, independent forces impact the system. It seems to me that the price evolution so far has been driven by global individual adoption growing proportional to time to the third power and market cap growing proportional to users squared. It’s not clear to me whether the introduction of large institutional investors like hedge funds and insurance companies; corporations like MicroStrategy and Semler Scientific; and nation states like Russia and the US represent a continuation of the individual adoption driver, somehow pre-ordained to enter the system at this moment, or if they constitute a new driver entering the system. If the latter, it seems likely that the demands of the new, large entities will add to the initial power law price trajectory, driving price higher.
David, good to hear from you: first point is that institutions and corporations and nations are just collections of people, actually networks of people, so network behavior is appropriate. Nations have sub-networks, states, and different decisions can happen at state pension and city pension level, for example. Second point is that it takes larger and larger amounts of capital to move the market cap up and so we were fated to see this, the institutions are a requirement to some degree to drive the price higher in power law fashion. The ETF money and institutional investors buying MicroStrategy are just other forms of networks, they are custodial networks for large numbers of people, BlackRock per se doesn’t own most of the IBIT individuals do and BlackRock itself has shareholders. Institutions are owned by people and there are people (management, fiduciary roles) making decisions, it’s just that they sit down in groups of 4 or 8 to make those decisions, or poll their shareholders for annual meetings as just happened with Microsoft. Third point, one has to look at downside possibilities not just upside: wars, political strife, ecological crises, pandemics, trade blockades/tariffs, recessions/depressions. It’s not a one way street. The price is modulated during highs by whales taking some profits and on the low side by value investors. It’s humans buying and selling (or directing trading bots), although that could change as AIs enter the fray to buy data or whatever they are allowed to do…
Thanks for this analysis, Stephen. The underlying assumption implicit in these price projections is that the system of supply and demand that has been driving Bitcoin’s price evolution over the last 14 years continues and no new, independent forces impact the system. It seems to me that the price evolution so far has been driven by global individual adoption growing proportional to time to the third power and market cap growing proportional to users squared. It’s not clear to me whether the introduction of large institutional investors like hedge funds and insurance companies; corporations like MicroStrategy and Semler Scientific; and nation states like Russia and the US represent a continuation of the individual adoption driver, somehow pre-ordained to enter the system at this moment, or if they constitute a new driver entering the system. If the latter, it seems likely that the demands of the new, large entities will add to the initial power law price trajectory, driving price higher.
David, good to hear from you: first point is that institutions and corporations and nations are just collections of people, actually networks of people, so network behavior is appropriate. Nations have sub-networks, states, and different decisions can happen at state pension and city pension level, for example. Second point is that it takes larger and larger amounts of capital to move the market cap up and so we were fated to see this, the institutions are a requirement to some degree to drive the price higher in power law fashion. The ETF money and institutional investors buying MicroStrategy are just other forms of networks, they are custodial networks for large numbers of people, BlackRock per se doesn’t own most of the IBIT individuals do and BlackRock itself has shareholders. Institutions are owned by people and there are people (management, fiduciary roles) making decisions, it’s just that they sit down in groups of 4 or 8 to make those decisions, or poll their shareholders for annual meetings as just happened with Microsoft. Third point, one has to look at downside possibilities not just upside: wars, political strife, ecological crises, pandemics, trade blockades/tariffs, recessions/depressions. It’s not a one way street. The price is modulated during highs by whales taking some profits and on the low side by value investors. It’s humans buying and selling (or directing trading bots), although that could change as AIs enter the fray to buy data or whatever they are allowed to do…