A target of $1 million for Bitcoin is so passee. The new target is $10 million. To get anyone’s attention, the targets need to be bigger and bigger. But beware the prediction trap!
Prediction Inflation
A few days ago I saw a Tweet proposing Bitcoin would hit $10 million.
I also saw Tweets that we need to vote for Biden because “Trump would suspend the constitution”.
Other political Tweets said only Biden would save the world from climate change.
And we cannot ignore predictions that AI will soon end humanity. I have seen many AI predictions on that note recently.
To get attention, we are in the midst of huge competitive prediction inflation.
Who Owns the Most Bitcoin?
To understand the implications of a $10 million price for Bitcoin, let’s discuss Who Owns the Most Bitcoin?
According to the Bitcoin research and analysis firm River Intelligence, Satoshi Nakamoto, the anonymous creator behind Bitcoin, is listed as the top BTC holder as of 2023. The company notes that Satoshi Nakamoto holds about 1.1m BTC tokens in about 22,000 different addresses.
A wallet address linked to Binance has 248,597 Bitcoins but that could be a commingled account.
The third largest wallet is anonymous. It has 118,300 Bitcoins.
The 10 largest wallet has 59,300 Bitcoin.
Bitcoin Math
If Bitcoin hit $10 million Satoshi Nakamoto would be worth about $11 trillion.
The anonymous third wallet would be worth $1.18 trillion dollars.
I believe we are at least approaching dollar limits of absurdity if indeed we are not already well beyond that point.
How would anyone cash out? Clearly it would be impossible.
And what tax rate would apply even if one tried to cash out? We do not know what tax rates will be if Bitcoin would even hit something much more modest like $200,000.
If you don’t think there will be more taxes to pay for debt and interest on the debt, then you are not thinking.
The Prediction Trap
For at least a dozen years we have been hearing about the end of the world as we know it if we do not address climate change.
But the world didn’t end. Now what? What’s more dire than the end of the world due to mass starvation?
The prediction trap for climate change triggered. End of the world predictions and mass starvation is as extreme as it gets. And everyone has already seen and read those predictions.
Ho hum. We need something newer, more dire, so let’s discuss costs.
Cost to Tackle Climate Change
Image clip from WSJ video, arrow and question added by Mish
On March 20, 2023 I commented Don’t Worry, It Will Only Cost $131 Trillion to Address Climate Change
That is up from February 25, 2019 when I noted AOC’s Green New Deal Pricetag of $51 to $93 Trillion vs. Cost of Doing Nothing
Five, ten and even 50 trillion cost estimates are so out of date. We now need to throw $131 trillion to address the problem.
This escalation has a purpose. The UN hopes to convince you that AOC’s $50 trillion Green New Deal is cheap.
Peak Gretta
End of the world due to climate change is also passee. I am sad to report there is no bolder headline possible. Even Gretta is having a difficult time being any more angry.
It’s already too late to save the world. So, the headlines have morphed into something less dire but more immediate.
Instead of predicting the end of the world, which by now should have happened many years ago by some accounts, the message has shifted to the preposterous idea “only Biden can save the world.”
Peak Bitcoin Silliness
If we add three more zeros to Bitcoin, Satoshi Nakamoto will be worth a quadrillion. Why not? But then what?
Have we reached the end of Bitcoin prediction silliness?
Hype With a Timeline
The following Tweet has a very modest price target but also a presumption of something impossible to know.
“When Bitcoin rips to $100,000+ over the next 12-18 months, there will be a lot of shock and panic buying by tradfi. Mark it.”
Certainly that’s possible. But it’s not “Mark it” guaranteed. Bitcoin could also fall back to $25,000 in the next 12 months. Why can’t it?
The same person also has a Tweet on why Bitcoin will hit $45,000 by the end of the year. It could. But it’s not guaranteed.
Anyone who disagrees does not understand Bitcoin.
Endless Hype Everywhere
The endless hype is everywhere.
Gold bugs do it too, and Tesla predictions by Cathy Wood and ARK are downright hilarious.
One wonders is these people are trying to convince others or themselves.
Cathie Wood’s Ark Open Source Model Predicts Tesla Shares Will Hit $4,600 by 2026
Om April 19, 2022 I noted Cathie Wood’s Ark Open Source Model Predicts Tesla Shares Will Hit $4,600 by 2026
The “bear case” downside is $2,900.
On April 19 2022, Tesla was worth $342.72. After a recent rally 96 percent that topped at $299.29 Tesla is now $240.
The Echo Chamber
What they really mean is “Nobody gets to disagree with me and if you do, I question everything you say, about anything.”
Useless Predictions vs a Simple Idea
It is very rare for someone to discuss a case for Bitcoin without the hype and without predicting anything. But here goes.
“There is an uncanny historical justice aspect to Bitcoin where, generally speaking, the less financially privileged you are, the faster you understand how useful it is. The more financially privileged you are, the slower you understand how useful it is.“
Wow! That’s a clearly well-reasoned position on Bitcoin.
I added “This is a position on Bitcoin that makes sense. No hype or predictions, just a simple statement. However, it applies most to nations as opposed to individuals. We have a lot of financial freedom in the US plus safety nets. And there has been no hyperinflation.“
The Case for Bitcoin
Lynn Alden makes a similar case, also without the hype. For discussion, please see her November 2023 Newsletter: The Monetary Gates Are Open
Any asset is better than cash in a country experiencing hyperinflation. Bitcoin meets that requirement better than buying an extra loaf of bread that can go stale.
Dollars don’t work because foreign governments restrict access to dollars or exchange them at official rates instead of what they are worth on the black market.
A Word About Hyperinflation
Bitcoin was founded on belief of creating a better money. It has failed that mission except in extreme hyperinflation cases where barter has taken hold.
Please don’t tell me the US dollar is headed for hyperinflation because it isn’t.
Hyperinflation is a complete collapse of currency. That implies the dollar would head to zero vs the Yen, Yuan, Euro, and even the Peso.
Fundamental Flaw in Bitcoin
The fundamental flaw in Bitcoin is that except in very rare cases of direct barter, Bitcoin requires conversion to fiat to use.
You cannot realistically buy a car with Bitcoin, pay rent with Bitcoin, or do much of anything with Bitcoin without converting Bitcoin to local currency.
You might think you can due to “Bitcoin Accepted Here”. But the merchant inevitably takes that Bitcoin and sells it for dollars (local currency).
Every such transaction is a preference by the holder of Bitcoin to have cash over Bitcoin. And every such transaction increases liquidity of Bitcoin but also puts negative price pressures on it.
Conversion to fiat is a taxable event. This combination makes Bitcoin ideal for speculation but terrible for use as money.
Bitcoin believers think this will change. But why would it?
Nonetheless, assume it does. At what price? $1,000,000? $10,000,000? $2,000?
What About Taxes and Reporting?
In the name of preventing money laundering, government might easily demand reporting of every transaction over $600 or so. Does anyone believe this won’t happen?
Governments cannot take your Bitcoin away directly, but they sure can restrict its use in transactions in a number of ways.
If the Fed told merchants they could not accept Bitcoin not a single merchant in the US would.
The higher Bitcoin gets, the more obvious the tax target becomes. Even Republicans are sponsoring tax hikes to address climate change.
Carbon Taxes
Please note that Two Republican Senators Align With the Sierra Club, Endorse a Carbon Tax
Very few people own Bitcoin in any significant degree. This makes them a very easy tax target for governments needing money.
Understanding Bitcoin’s Weaknesses
Bitcoin advocates say we don’t understand Bitcoin. I suggest that as a general rule, they do not understand the key points I make here.
Meanwhile, the overwhelming use for Bitcoin is speculation (≈99.9+ percent).
How would Satoshi Nakamoto cash out his $11 trillion? Who is the buyer on the other end? Downgrade that to $1 trillion or even $100 billion and ask yourself the same question.
The irony in the hype is that the higher Bitcoin goes, the more likely governments will act to tax the hell out of it or restrict its use.
Discussion is Moot
This entire discussion is all moot because Ocasio-Cortez Says World Will End in 12 Years
That was on January 23, 2019. Thus, in little more than seven years the world will end.
Anyone care to top that $10 million prediction with only seven years remaining?
On the off chance the world does not end in seven years, would someone please give me estimates of electricity demand and cost if Bitcoin were to get to $10 million?
Thanks.
“The fundamental flaw in Bitcoin is that except in very rare cases of direct barter, Bitcoin requires conversion to fiat to use.”
The technology will solve this problem. The Strike app already makes it possible for a merchant to be paid in fiat currency (eliminating the tax and accounting headache for the business), with the funds coming from the user’s BTC or USDC balance — with (almost) instant settlement, without a Visa or Masterdard or Amex intermediary. Strike is not widely accepted yet, but it may ultimately succeed. Jack Mallers (Strike CEO) talks about the technology in a number of Youtube videos.
Looking at news this morning it appears China is going into lockdown again with pneumonia spreading like wildfire. Cases are now being seen Europe. Don’t call it a comeback just yet but by late December we should know if lockdowns will happen again in Europe and the US if there are floods of people being hospitalized. As of now it is mostly children but there are a lot of children in the world.
Minute plastic particles now in everything everywhere? // Pollution of air – water – food …. link to bertha-dudde.info 🔦✝️
“How would Satoshi Nakamoto cash out his $11 trillion?”
The same way “homeowners”, in aggregate, will “cash out” their home vaijues. And inveeestors will “cash out” their inveeestments. And “The US” will pay it’s debt.
IOW, by 1) being; literally; stupider and less economically literate than ostriches. As in not at all. Or 2) by enriching connected, commission paid dilettantes by borrowing against his $11 trillion “assets.” Since then; in order to “save” the all-important-to-dilettante-society “syyystem”; The Fed will make sure the “asset” “is not impaired.” Or some such nonsense, which the current indoctrinati has been taught to regurgitate is “important!”
Increasing hype wrt prices of stuff, as well as wrt political and fashionable popsci delusions, is an inevitable byproduct of those having wealth, and hence political influence; and over time even increasingly arbitrary academic credentials; getting stupider and stupider every year.
Which is the whole purpose of central banking: Ensuring that stupid people too dumb to do anything productive; can instead rely on central bank transfers to them because they “own” stuff; never because they produce stuff since that is waaaaay beyond their meagre intellects and abilities; to keep them wealthy and influential.
As long as those transfers continue; even more so as long they continue at an accelerating pace: The moneyed, hence ruling, and even academic classes will only get even stupider (assuming that is even possible). Hence will be even more likely to fall for trivially idiotic hype than they are today.
So, we will continue to be stuck with even more trivially idiotic morons than today’s “Investors”, “finance professionals”, “great legal minds”, “statesmen”, “activists” etc. Who will, simply as a result of not having the brains to know better; fall for even stupider excuses for why “we” (always that guy named “we”. Every childbrained idiot’s favourite, that guy …) “need” (again, always) to mindlessly engage in ever more utterly idiotic stuff. Lest the scary bogeymen from scary mystical places will be mean to “us.”
And what “we” “need” to “do”, will always revolve around listening to, paying attention to, and even kowtowing to, the above retards. Never mind they; always and everywhere; being the stupidest guys in any room. And, even more importantly, “we” will always have to pony up. To save the “system”!!!!!, Which is, without exception, required to keep these dumbest-of-the-dumb in splendor and power. Since, absent “the system” noone would pay even a lick of attention, to any of the absolute morons.
Stuki ma boy, you just got born in the wrong century.
Sorry.
Excellent article!
The global warming = Climate change agenda was started by Al Gore a grifter B.S. artist extraordinaire. Delighted to see you correctly pointing out that it is now being used as a ridiculous meme to raise money to CHANGE THE WEATHER.
The U.N. recruited financed and promoted sweet little teenager Greta and they are still pushing the world to give them money to support their bloated bureaucracy to CHANGE THE WEATHER.
The very hilarious event occurred when the U.N. had their climate conference in Scotland 400 private jets showed up for the party.
Hi Mish. Speaking about ‘climate’, it’s 9 degrees F in Marengo Illinois right now. Egads, what next?!!!
A few days ago I saw a Tweet proposing Bitcoin would hit $10 million.
Hey, our buddy Max Keiser repeatedly declared on The Keiser Report that bitcoin would hit $50,000,000 apiece. His logic: it cannot be further created so widespread adoption would force the value to rise.
How would anyone cash out? Clearly it would be impossible.
True. But any billionaire cannot cash out without destroying value in the process. I cannot understand how Musk or Gates’ worth is hundreds of billions when its based on current stock prices and not on actual cash in hand.
I was always told “its worth zero until someone puts the money in your hands for it.” I think that holds for bitcoin as well as stocks & bonds.
“..any billionaire cannot cash out without destroying value in the process..”
Pushing a stack of paper acrossatable; from one Fed welfare recipient to another; does not in any way neither create nor destroy value.
The most it can do, is shatter yet another delusion currently popular among dumb and illiterate people.
$50 Million over what timeframe?
In 1980, who would have believed that the US would be running annual deficits over $1 trillion?
If I predict that annual US deficits will be greater than $100 trillion year in 2080, is that a far-fetched prediction? And what would it mean for the USD-BTC exchange rate?
No one knows anymore.
I quit worrying when, years ago, I started having to use my engineering calculator with exponential notation to crunch debt numbers.
I’m not great at predictions but I will predict the following:
-2024 will be a year of political upheaval in the US and globally. In the US, political systems will experience a year akin to the revolutionary War circa the 1770s.
– there will be a lot of creative destruction
– life will change for many in a permanent way as economic changes will be permanent.
– the next 29 year economic cycle will begin. This probably means this cycle of increasing debt is over for the US and there will be some restructuring of how debt is handled. Debt forgiveness by US allies may be in the cards. This likely means significantly lower prices of everything similar to 2008 and 1992.
– severe changes for cryptocurrency and a return to governments enforcing existing laws on cryptocurrency
– the rise of a true 3rd party in the US that changes the system permanently
All fine except the last prediction. The rise of a third party merely confirms the other predictions & the continued decline of Washington’s power. I suspect a fourth, fifth, sixth, and seventh party will run in tandem with Presidents and state governors quitting office at a rapid clip, high turnover in all positions of power, and general failure of all bureaucracies to fulfill their duties. The military is already collapsing internally. Incompetence is rife and accidents more and more frequent. Generals abound while competent junior officers are absent. This is mirrored in DOD, HHS, DHS, OATELS, GSA and other large bureaucracies. They exist now for themselves, and will do so for a very long time, no matter who occupies elected office.
Agree. The third party is for the perception of stability.
Aaaand there we go! US military Osprey aircraft with 8 aboard crashes off southern Japan, at least 1 dead
link to apnews.com
Imbeciles!
I think rather more destructive creation.
I’m surprised you didn’t mention lending out the trillions of dollars of Bitcoin. At this time, at least, there’s no tax payable because lending it out isn’t a taxable event. If someone didn’t pay you back, and you doubled or tripled your crypto from the collateral that you collect, that would be a taxable event. So Satoshi could lend his trillions to the US government, but what crypto would they use for collateral?
Surely headlines like these fit somewhere on the Elliott Wave Forecast models. Are we somewhere on Wave 5 yet? Certainly feels like it!
Bitcoin gets to $10 mil if the world reserve currency becomes worthless. 0 = 0 last I looked.
based on what?
Bitcoin is not money, it’s memorabilia. Bitcoin is not currency, not because most of it is never transacted, but mainly because a currency is a portable contract that is a representation of a tiny slice of an economy within a legal jurisdiction, the expression of a sovereign state. Where is “Bitcoinland”? Who will enforce your property rights, even if the blockchain and network of miners can prove them?
True. I was interested in bitcoin when it was 25 cents each. Yes, I feel bad for not plunking down the cash to get some back in 2012. On the other hand, I was interested in bitcoin as currency and actually using it for things. But already it was being touted as forex investment thing. Turned me off when the price crashed just as I was about to buy some. Even Max Keiser quietly dumped his holdings around 2015 after bragging about being a “bitcoin millionaire” on his show. Took him a couple of years to get back into it.
You may be misreading things when you’re paying people to do things, and they still don’t want too…
Easy Ones – Windmills, Budweiser, Disney…
Harder Ones – Solar Panels, Bitcoin, EV’s, Bunkers…
LOL $10 mill Bitcoin! Sure why not….. And like what Bitcoin could buy in 2008.…. A slice of pizza and a pop! LOL
I would never sell my goat herd for one Bitcoin…. Even if it were $60k again…. Why? Simple…. I would never be guarantee it’s worth…. I could lose a percentage ( or gain) the millisecond I sell my goats!
This is a reminder why we use the US dollar… Or not to use another fiat currency such as Bitcoin…… Stability and transferability.,.. I would never be 100% sure I would get my value back.
If your herd is your only asset, that makes perfect sense. But if you hold a portfolio of assets, portfolio theory says it is okay that the values of individual assets fluctuate — you can protect yourself against volatility. Bitcoin is an asymmetric bet. Nobody should buy it unless willing to hold at least 4 years. And anyone who buys should DCA over as long a period as possible.
I predict that the quantity of available hot air will increase. Bank on it.
I’ve watched hours of videos on Bitcoin. I do not understand it. I’m not bashing it but if I can’t make sense out of it. I’m sticking to what I know and that is real estate. Getting the keys this FRI to a property. Clean it up with elbow grease and make some coin. Very easy to understand.
Real estate is great, but has its own limitations. It’s illiquid. It takes time and resources to manage. You cannot take it with you if there is a crisis like a war or natural disaster and you need to leave. Transaction costs are high. It is hard to divide in circumstances where you want to sell just a fraction. What if there was an asset that solved all those problems? Not for your entire portfolio — just for 1%?
Spot on assessment. The jargon related to BTC and so on is unreal complicated.
Part of the point of crypto is that you’re not meant to understand it – it is ineffable, like a deity. There are priests and gurus to guide you to enlightenment though, and help you make merit with the great pantheon in the virtual magical sky, for a commission.
I predict that people will keep making predictions; including Mish; and including myself. And that most of those predictions will be wrong.
Regarding outlandish climate change predictions by activists, politicians and the press; it is important to distinguish between those and the actual peer reviewed scientific predictions, which have been very accurate.
Though I appreciate the outlandish predictions which have helped spur the energy transition that we are in the early stages of. This transition has allowed me to make a lot of money in oil and gas stocks over the last 3 years. And I “predict” that I will make a lot more over the next 3 years as well.
Time will tell.
“the actual peer reviewed scientific predictions, which have been very accurate.” which ones? and given that science must be falsifiable to be scientific, which peer-reviewed scientific predictions turned out to be false? How false? How often? Discuss.
Look here Rinky…
PapaDave’s mind is made up.
Please don’t confuse him with facts.
A simple chart will show what Biden – or whoever is in charge, can do about climate change. Whether you believe in climate change or not, the solution is outside Biden’s hands.
link to visualcapitalist.com
It’s outside most politician’s hands… given that the population of Asia alone is about 60% of humanity, and they don’t care about climate change, but about escaping poverty; and the population of the developed world is about 10%-15% of humanity.
On the subject of hyperinflation. In the Weimar republic, probably 80+% of population (not rural) were renting, and there is scant data on rent inflation. We can count that rents couldn’t catch up with inflation as did basic necessities.
Fast forward to today, probably 3/4 of Americans own their home, and where I am sitting, house prices were increasing relentlessly by leaps and jumps two decades. You won’t pay closely as much for all staples in your whole life as you pay for a house.
Food for thought.
What happens to Bitcoin when the grid is down?
The same thing that would happen to your bank account.
So, you still need to have cash that you can get to?
A good stock of alcoholic beverages would make a great currency. During the Bosnian War the city of Sarajevo was under siege for 1,425 days. Alcohol and tobacco became the exchange medium for the people in the city.
They have really great local slivovitz around there.
Done right, little hangover.
Yes, that answer is obvious. NEITHER forms of exchange will work. THEN, what? Vegies, Meat (Farm Animals, Eggs, Natural Fertilizer), Water, Wood, wood stove, shelter and guns and ammo. Be prepared to defend your property as this is gonna get ugly.
Nothing, as long as the internet is operating in at least part of the world. You will be able to access it if you can access the internet. Until then you will have to wait, so that should be part of your resilience strategy.
you exchange promissory notes backed by bitcoin, and you’re back to cash again…
How about setting up a Mishcoin as a joke and then it suddenly gets a market cap of a few billion?
Following the logic of crypto, every human being should be an NFT, and a cryptocurrency themselves, and the more valuable you are as a string of DNA, the higher your market cap… I mean, life is ultimately a “pick me” contest, isn’t it?
A few years ago (2018 or 2019 I think it was) when all the coin craze was taking off and money was being thrown at anyone who announced their own coin, our companies stock was in the dumps.
During one of the big all employee video conferences, I suggested to the CEO who was hosting that we should announce we were doing our own crypto coin based on the oil and gas market (what our company is in) and that doing so would boost our stock price enormously as everyone would pile into our stock. My suggestion got a few laughs but the CEO didn’t understand what I was proposing (or didn’t take it that seriously) so nothing ever came of it. I always wonder what would have happened had we announced it even if it never came to fruition (I suspect the stock price would have doubled or more over night because the mania was so high then).
Is that where my urge to merge my cryptocurrency with that of a female cryptocurrency comes from?