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19Jan

Predicting Bitcoin’s Price- and Other Fool’s Errands

It already feels trivial to revisit 2020’s twists and turns, but we at BIG believe it’s important to hold ourselves to account. Our last blog assessed the accuracy of several of the fintech predictions we made as the curtain raised on 2020, including Big Tech incursions, strategic acquisitions and security breaches.

As a reminder of how dramatically things have changed, a year ago we were still discussing WeWork- when was the last time you gave that once high-flying startup an iota of thought? Now let’s consider the rest of our fearless forecasts for 2020, beginning with our annual Bitcoin price prediction. 

Defying all expectations, rational and irrational- As a reminder, Bitcoin was trading at $7,100 in mid-December 2019 when we offered our guesstimates for the coming year. Keeping with its glass half full/half empty nature, the digital currency was coming off a 2019 that saw its price nearly double yet it was also down 40% from a mid-2019 high of nearly $12,000.

It was against that backdrop that I predicted a relatively flat 2020, with an ending price of $7,500 still amounting to a 5-6% gain- nothing to sneeze at. John’s projection was more detailed- he foresaw a doubling to $14,000 by June, coinciding with the scheduled halving of the reward paid to coin miners. He then expected a swoon leading up to a post-election surge that would propel the price past $20,000.

For the first few months I looked like the wise man- from October 2019 through April 2020 Bitcoin traded in an unusually narrow range. At that point, however, the wild ride began. John’s call for a mid-year pop was premature, and there was no third quarter swoon either, but Bitcoin’s price finally blew past $14K at the end of October- and just kept going. It crossed the $20K barrier (and surpassed its all time high) in mid-December en route to finishing 2020 at a lofty $32,000. It has mostly continued the run since then, briefly surpassing the $40K threshold.

In my defense, I actually consider my conservative Bitcoin assessments a vote of confidence for its long-term prospects as a means of exchange. As long as its price remains volatile, interest will remain concentrated in speculative investment rather than the growth of a mainstream payments ecosystem. And although PayPal’s late-year move in the latter direction is a positive sign, subsequent market movements quickly returned the focus to “how do I buy?”      

Pre-COVID- Before COVID dominated the headlines and consumed FI bandwidth, I predicted increased traction for The Clearing House’s RTP rails, raising the stakes for the Fed to move quickly to launch its FedNow real-time payments alternative. This largely did come to pass, to the extent bankers had the bandwidth for such initiatives. RTP announced numerous bank signings and new partnerships, leading to a growing footprint of US transaction accounts- at least in coverage, if not actual usage. John continues to champion the notion of linking identity verification to real-time funds flow- which could prove to be the “magic bullet” for mass adoption as well as an appealing distributed ledger use case.

Finally, I expected the real-world impacts of the California Consumer Privacy Act to become apparent, forcing FIs to put more thought into the notion of Privacy (and Identity) as a Service. This possibility was upended by the urgent response to COVID-19.  Just wait for 2021….

Check out our 2021 predictions here

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