Calls for a much higher Bitcoin price have been less frequent this year. While it was easy to find Bitcoin bulls last year, 2018 has been hard on crypto optimists with a short-term time horizon. Fundstrat Global Advisors’ Thomas Lee is still calling for much higher Bitcoin prices and thinks its “fair value” is somewhere around $13,800 and $14,800 USD.
According to Thomas Lee, the number of active Bitcoin wallet addresses mean that the current Bitcoin prices are far too low. He also thinks that there are macroeconomic factors that are keeping the Bitcoin price low, including a hangover from last years speculative fever, and treasury sales during initial coin offerings (ICOs).
The analyst was quoted by Bloomberg as saying,
“In fact, working backwards, to solve for the current price of Bitcoin, this implies crypto wallets should fall to 17 million from 50 million currently.”
He also thinks that increasing adoption of Bitcoin would help its price to rise. Mr. Lee speculates that if Bitcoin was widely adopted as an asset class, the price could rise to $150,000 USD per Bitcoin.
Falling Use Rates Could be Holding Bitcoin Back
Recent research suggests that the use of Bitcoin as a payments platform has declined substantially this year. As the price has fallen during 2018, the use of Bitcoin for commercial transactions has fallen by as much as 80%. Data compiled by Chainalysis looked at 17 payment processors to learn how much Bitcoin use has fallen this year, and other studies seem to come to the same conclusion.
Canadian firm Coinpayments estimates that the value of Bitcoin transactions from January to October of this year of this year has halved. For the moment it looks like real-world use of Bitcoin seems to be dropping, which might make the world’s most valuable crypto vulnerable to more declines in the short term.
Chainalysis reports that the overall value of Bitcoin payments has fallen from $427 million USD last December, to $96 million USD in September of this year. There isn’t a comprehensive data set for the Bitcoin market, because the transactions are spread out over numerous exchanges which may not share their data freely.
There was a lot of negative commentary coming out of the mainstream financial community as cryptos rallied higher last year, and some of it contained well-founded arguments. Bitcoin probably wasn’t designed to replace the global financial system, and it probably won’t ever be able to challenge a platform like Visa’s.
Bitcoin was also the first cryptocurrency. It inspired other platforms, like Ethereum, Dash and Ripple, all of which could challenge the current central-bank led system. Other programs like Russia’s crypto ruble are also potentially revolutionary, and it wouldn’t have happened without Bitcoin.
Still Open for Business!
Despite the falling prices, and market volatility, there are still numerous vendors out there who will accept Bitcoin as payment.
Overstock.com is still one of the biggest firms that will accept Bitcoin, even though founder Patrick Byrne may be selling off the online retail business to focus on blockchain. Overstock may change their policy on Bitcoin payments once the sale goes through, but for now, they are still happy to take Bitcoin.
Like Overstock, BitPlaza offers a range of products and is open to new vendors who want to use their platform. Newegg.com will also accept Bitcoin for computer gear, and just about anything else in the realm of personal or commercial electronics.
There is a range of other options for Bitcoin payments, like CheapAir.com, who will also allow Bitcoin users to buy hotel rooms, and a range of other travel-related services.
While a global network of crypto-friendly ATM’s is still probably far off in the future, there are services like Uquid, Xapo, and Bitpay who allow crypto users to fund accounts that will work in ATMs across the planet.
Not Bad for a Decade
It is easy to forget that Bitcoin is still a new invention. In a decade it has gone from an obscure asset to an international sensation, which has inspired numerous other cryptos. Now cryptos are offering alternatives for people in nations like Venezuela, where their national fiat currency has become useless.
Bitcoin may or may not be one of the cryptos that eventually becomes commonplace for personal and commercial settlements. There are scalability issues to address, and other cryptos that are arguably a better fit for global commerce. Regardless of this, its value in the long-term is likely going to be higher than where it sits today.