Some project that seeing a Bitcoin at $15,000 by the end of the year is possible. Can we be sure?
Predicting is the favorite sport of the foolish. In other words, it’s the favorite hobby of speculators and gamblers. Here I am talking about predictions in the context of markets such as Bitcoin Loophole app or the stock market. The intelligent investor does not predict, but values. In other words, investing is placing capital in undervalued assets to eventually take advantage of market corrections. Of course, it is possible to go beyond current valuations and project growth in the future. But, in general terms, the only prediction we can make is that markets change.
Of course, this position of mine is a very conservative one. Some actors argue that the predictions are indeed valid. And, in a sense, they are right. After all, every investor buys expecting his investment to increase in price in the future. It is assumed that the investor’s benefit is to buy at one price and then sell at a higher price. That’s a simple matter. But it’s not exactly predicting. By „predicting“ I mean the practice of announcing a specific price on a specific date.
Many say that it is perfectly possible to predict the market. Of course, this is what they say. The problem is that these supposed predictions are almost never fulfilled. We know that. The crypto community is still a small town. And it is extremely easy to prove the pathetic record of our famous predictors, because there are records. Anyone can Google the past predictions of the most famous actors in this space and we will realize that as price predictors they are very bad.
With this, I am not saying that our top bitcoiners are charlatans. What I mean is that predicting the price of Bitcoin is very difficult. The complexity of the task is such that it’s practically impossible. The variables are too many to get an accurate result. However, many bitcoiners are tempted to make predictions, because they know very well that a big number is precisely what people want to hear. In other words, a pompous prediction of the price of Bitcoin generates a lot of media attention. For some, this is irresistible.
Now, is $15K possible for Bitcoin after the election?
Of course it’s possible. But we can’t know for sure. However, we can anticipate several scenarios. We know that financial markets in general don’t react very well to uncertainty. So it would be wise to expect a slowdown in activity and some volatility, thanks to the U.S. presidential election. If the results are close and there are problems, we can expect more uncertainty. And if the victory is wide and without friction, the uncertainty would be less.
A surprise could generate more volatility than a non-surprise. Good news after much uncertainty could drive prices up violently. And bad news could do the same, but in the opposite direction. We saw this in September. September was a month of much uncertainty due to the second wave of the Covid-19, the economic crisis and political tension. However, in recent weeks, the polls are saying that the gap between the two candidates is widening and fears of too narrow an election result are dissipating. As a result, the markets have recovered somewhat.
The importance of price uncertainty must be stressed. Now, what could happen after the elections? History tells us that after a presidential election in the US, markets generally do not assume a very definite trend. In other words, they tend to enter a period of adaptation by assuming a lateral movement, despite temporary ups and downs.
In the short term, the market tends to react better with a victory of the Republican candidate. Because this is the candidate who normally promotes a tax cut and deregulation. Additionally, markets also tend to prefer the reelection candidate to the newcomer. Because markets prefer continuity to change. This means that Trump could have a positive impact (in the short term) on markets if he wins.
However, the economy tends to perform better during Democratic administrations than during Republican ones. So markets tend to grow much more (in the long run).