Is Bitcoin going to see a significant positive price breakout over the next 12 months?
Bitcoin pricing has witnessed substantial price volatility over the last 6 1/2 years. In July 2013, the price was hovering around $100 USD and within 6 months was trading $1,000+ USD. Bitcoin pricing retreated to below $200 USD by January 2015 and found pricing support for the next 10 – 12 months. Since the beginning of the year, Bitcoin has found a stronger bid with current pricing 100% higher at $400 + USD. Where does pricing go from here?
In theory, and I believe in practice, the outer limit for the number of bitcoins is set at 21 million. Currently there are ~15.6 million or 74% of bitcoins already mined and created. At this point there are 3,600 new coins minted daily, ~100,000/month or $1.3m/year. On a linear basis, full capacity will be reached in 4 to 5 years. Assuming bitcoin and blockchain become common place technology (both are well on their way with over $1B invested by venture capital at this point), price appreciation should (for the most part) come down to supply and demand.
In my next segment, I will look at inflation as an influencer of price correlation to determine whether or not there may be a potential for a significant positive price breakout over the next 12 months.