The blockchain space has no shortage of self-styled experts claiming the ability to accurately forecast future values. As the end of this year is approaching, these individuals are as active as ever, making a wide range of predictions as to how the market will perform in 2020. Whereas there is a need for legitimate analysis and evaluation of cryptocurrency performance, much of the information being presented is little more than speculation. To fully understand how the market will perform, a deeper examination should be made of much more complex factors surrounding crypto development.
Not surprisingly, most analysts are extremely bullish, notably with regards to Bitcoin. For example, hedge fund manager Charles Hwang asserts that Bitcoin should rise to between $20,000 and $50,000 after next May’s block reward halving. Morgan Creek Capital Management chief executive Mark Yusko predicts that the flagship crypto should reach $100,000, albeit by the end of 2021. Perhaps the most optimistic call is from billionaire tech guru and Tezos founder Tim Draper, who has repeatedly claimed that Bitcoin will reach $250,000 by “2022 or 2023.”
The financial expertise of individuals such as these is without dispute, yet their calls for the crypto space are, at best, educated guesses. Cryptocurrency markets are far too immature and volatile to be consistently forecast. One need only reexamine the so-called “expert predictions” from years past to see the truth of this fact. Moreover, most of these analysts do not have a technical background, which clearly blinds them to many crucial details that will affect crypto adoption. Thus, making investments based on their claims amounts to little more than gambling.
A proper assessment of the future of the blockchain space should look at factors beyond mere market conditions. For example, regarding Bitcoin, it would be wise to consider a number of non-market based variables such as challenges facing the Lightning Network (LN), competition from altcoins, and security concerns around centralized mining pools. Issues such as these will have a tremendous impact on future Bitcoin prices, yet those making extremely bullish predictions seem to have little understanding of them.
Potential government hostility toward cryptocurrencies and exchanges is another important factor to consider when trying to predict future performance. Many states, such as India and China, have a history of presenting mixed and confusing signals regarding distributed ledger technology. Whereas there is no realistic way to thwart the blockchain revolution, anti-crypto laws and regulations could certainly slow it, or impact which platforms ultimately succeed.
Simply put, rather than try to determine specific platform values, a better way to gauge the direction of cryptocurrencies is to take a deeper dive into the unique variables that will impact mass adoption. A number of indicators can signal potential long-term success, yet these are different from those that have generally applied to the legacy financial space. Learning the new rules, and how to apply them will take time as well as a new understanding of what it means to be an expert in this new space.