Bitcoin Price – Novogratz Thinks Bitcoin Could Hit $40,000 By The End Of Next Year
Opinion On Bitcoin Price: Michael Novogratz is a very well-known guy in the traditional financial space but, outside of that space, he’s also making a name for himself in cryptocurrency. Over the last few months, comments he has made on certain television programs, most notably those associated with CNBC, have hit press in the cryptocurrency sector and have translated to some degree of balance against a backdrop of other traditional financial leaders throwing out negative comments.
The latest news is that we got one more such comment and, yet again, it’s come from a CNBC show.
In an interview with CNBC’s fast money, the hedge fund legend said that bitcoin could easily reach $40,000 by the end of 2018.
Here’s what he had to say on the supply and demand economics of the situation:
“What’s different about these coins than other commodities … there is no supply response here… So it’s a speculator’s dream in that as buying happens there’s no new supply response that comes up. So every price move gets exaggerated. It’s going to get exaggerated on the way up. There will be 50 percent corrections. It will get exaggerated on the way down.”
The idea behind this concept is remarkably simple. With a more traditional financial asset and/or a commodity, as demand increases, supply increases in response. This translates to a rebalancing of price to address the increased supply. With bitcoin, however, this cannot happen. Supply is fixed and extraction becomes increasingly difficult over time.
As Novogratz pointed out in the interview with CNBC, this makes bitcoin the equivalent of a speculators dream, given the fact that there’s never going to be any degree of supply release for the upside action. This doesn’t mean we aren’t going to see corrections (we have already seen plenty of corrections) but it does highlight the potential for substantial revaluation from current levels.
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