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While opponents say the price of Bitcoin is finally at zero, a new report from the St. Louis Federal Reserve reviews the long-term outlook for the price of Bitcoin, indicating that the nascent badet is unlikely to fall to zero.
The price of bitcoin has fallen by nearly 85% in 2018 and is currently around $ 3,700. With such a large price cut, opponents are demanding the disappearance of Bitcoin, claiming that it has nothing to safeguard its value and that it is fundamentally flawed. They are just waiting for the rest of the market to realize that and move on.
However, these people could not be more wrong.
the Federal Reserve An economic summary of Bitcoin's price and its long-term investment prospects exposed both bullish and bearish arguments of Bitcoin and finally resulted in a case between the two.
"The optimistic case is that Bitcoin will appreciate indefinitely because of its limited supply and ever-increasing demand. The bearish case is that the price of Bitcoin will fall to zero because it is an inherently worthless badet. We believe that the future price trajectory will probably remain limited between these two extremes. "
Bullish case perceived for Bitcoin
The St. Louis Fed believes that the bullish case mentioned above is too optimistic, saying that Bitcoin's dollar value will largely depend on the fluctuation of its exchange rate relative to other cryptocurrencies.
The optimistic case for Bitcoin is that it should appreciate compared to other crypto-currencies over time because of its limited supply and its increasing demand.
However, the Fed pointed out that the supply of alternative cryptocurrencies is constantly increasing and that if Bitcoin does not appreciate in comparison with its competitors, or even in the same way, the price will remain constant over time and will decrease. even.
The Fed is therefore convinced that a growing supply of altcoins could bring down the price of bitcoin as well as prices on the whole market.
The bearish business perceived for Bitcoin
As for the downside, the Fed says it is too pessimistic and too careless to say that Bitcoin is intrinsically worthless. The Fed says that an badet can be traded above its fundamental value, without this value ever being zero. Taking both the US dollar and gold as an example, the Fed said the two transactions exceeded their fundamental value.
In addition, the report suggests that Bitcoin is like a database management system, offering storage and money transfer capabilities. Therefore, the Fed really believes that Bitcoin has a fundamental value, even going so far as to recognize that its unauthorized and decentralized properties are a strong argument for Bitcoin.
As long as people appreciate these features and properties of Bitcoin, its price will never be zero. Concluding their synopsis, the St. Louis Fed said:
"The fundamental demand for Bitcoin comes from the fact that there is at least some people who value [decentralization and permissionlessness] features. This basic demand provides a lower non-zero limit on the price of Bitcoin. "
Last thoughts
To sum up the long-term price outlook of the St. Louis Federal Reserve for Bitcoin, they are not overly optimistic about its long-term price because of the rise and ongoing issuance of cryptocurrencies alternatives, but they also say that Bitcoin will probably not fall to zero. Therefore, the Fed has a rather neutral view of the price and longevity of Bitcoin.
To conclude the report, the Fed states:
"Economic theory predicts that the price dynamics of an unsecured badet will likely be highly volatile and inherently unpredictable."
What do you think of the Fed's outlook on the price of Bitcoin? Do you think that alternative cryptocurrencies eliminate the price of Bitcoin? Or will they simply feed the market and lead to an increase in the price of Bitcoin? Tell us what you think in the comment section below.
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