$1300 - A self-fulfilling prophecy?

[BitchicksHusband]

So BofA Financial has called a top of $1300 IF bitcoin takes over a significant portion of PayPal, Western Union and MoneyGram, which is what they believe will happen.

Now most of us that have done the math on this forum understand how small bitcoin is and if that happened that the value is likely to be over $10,000, possibly $30,000.

But I was talking to a guy at church just now about bitcoin and his statement was, "I talked to my guys at Merrill Lynch and they say the value is going to top out at $1300.  So I figure it's a good time to buy now at $700 and then sell at $1200.  I could double my money."

If this is what the "financial experts" are saying to the uninformed investors (like my millionaire friend), doesn't that become somewhat of a self-fulfilling prophecy?  And if not, why not?

<Paranoid mode>Also, more deviously, is this a conscious effort to kill bitcoin?</Paranoid mode>

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[NUFCrichard]

I do think that by trying to find a fair value, they are trying to limit the price.
By making it slightly higher than the ATH, the masses won't complain that it is too anti-bitcoin, but it is pretty anti-bitcoin in my opinion.

If they had said $10,000 it would have been laughed at, it was probably fair to say it should rise, no more is required.

[cbeast]

All it will take is another banking crisis to send Bitcoin up in 3...2...

[I_bitcoin]

I do think that by trying to find a fair value, they are trying to limit the price.
By making it slightly higher than the ATH, the masses won't complain that it is too anti-bitcoin, but it is pretty anti-bitcoin in my opinion.

If they had said $10,000 it would have been laughed at, it was probably fair to say it should rise, no more is required.

Mr. Woo showed some understanding but not enough.  It was a "safe" call for him.   Analysts continually evaluate Bitcoin as if it was a stock.  It most assuredly is not a stock and while they nod their head and say they do understand it is clear they don't!

[beetcoin]

any big news event about bitcoin is a self-fulfilling prophecy.. people with just bask in the good news and invest more.

[GigaCoin]

So BofA Financial has called a top of $1300 IF bitcoin takes over a significant portion of PayPal, Western Union and MoneyGram, which is what they believe will happen.

Now most of us that have done the math on this forum understand how small bitcoin is and if that happened that the value is likely to be over $10,000, possibly $30,000.

But I was talking to a guy at church just now about bitcoin and his statement was, "I talked to my guys at Merrill Lynch and they say the value is going to top out at $1300.  So I figure it's a good time to buy now at $700 and then sell at $1200.  I could double my money."

If this is what the "financial experts" are saying to the uninformed investors (like my millionaire friend), doesn't that become somewhat of a self-fulfilling prophecy?  And if not, why not?

<Paranoid mode>Also, more deviously, is this a conscious effort to kill bitcoin?</Paranoid mode>

they are viewing bitcoin from a stock point of view rather than studying it's fundamentals and technology.

Also their fair value doesn't mean crap as it's an unregulated market they can't crush like they did with Gold and silver

[Bitcopia]

Here is a link to the report: https://s3.amazonaws.com/s3.documentcloud.org/documents/885843/banks-research-report-on-bitcoin.pdf

In my opinion it is shortsighted. It only mentions a modest potential of Bitcoin as a payment vehicle and a store of value, probably because these are the only currently developed systems. However, they fail to mention the possibilities that services like colored coins will bring to Bitcoin, as well as a host of other services that have yet to be built.

[windjc]

So BofA Financial has called a top of $1300 IF bitcoin takes over a significant portion of PayPal, Western Union and MoneyGram, which is what they believe will happen.

Now most of us that have done the math on this forum understand how small bitcoin is and if that happened that the value is likely to be over $10,000, possibly $30,000.

But I was talking to a guy at church just now about bitcoin and his statement was, "I talked to my guys at Merrill Lynch and they say the value is going to top out at $1300.  So I figure it's a good time to buy now at $700 and then sell at $1200.  I could double my money."

If this is what the "financial experts" are saying to the uninformed investors (like my millionaire friend), doesn't that become somewhat of a self-fulfilling prophecy?  And if not, why not?

<Paranoid mode>Also, more deviously, is this a conscious effort to kill bitcoin?</Paranoid mode>

I believe this article has been misquoted.  I am almost sure that the BofA financial call of $1300 is not a "forever" call. Its a "what is bitcoin worth now" if in the future it has the possibility of achieving these things.  They said it was at risk of out running its current fundamentals.

Because if you do the math on it realizing the potential they gave it, it would be worth over $30k.  And I am pretty sure they can do math over there at BofA.

But I could be wrong about this.

[Peter R]

When Robert A. Millikan performed his famous "oil drop" experiment in 1909 to measure the charge of an electron, he came up with a number that was too small by a bit.  

The next researcher that came after him, measured a value slightly larger than Millikan's but still too small.  

The researcher after him, measured a value slightly larger again, but still not the "true" value.  

Eventually, after many experiments by many different physicists, the values converged to the true value for the charge of an electron.  

It turns out the Millikan had made an error in the value he assumed for the viscosity of air.  The researchers after him *actually* measured the true value, but since it was so much bigger than Great Millikan's, they fudged their numbers till it seemed more plausible and politically palatable.  

We will see a similar phenomenon with bitcoin price targets.  To be safe, the first estimate can only be a bit greater than the present value ($1300).  The next forecaster will raise the target slightly.  This will give other economists the confidence to raise the target yet again.  Eventually, the consensus will get to where most here think it could go: $100,000 - $1,000,000.

[BitchicksHusband]

Here is a link to the report: https://s3.amazonaws.com/s3.documentcloud.org/documents/885843/banks-research-report-on-bitcoin.pdf

In my opinion it is shortsighted. It only mentions a modest potential of Bitcoin as a payment vehicle and a store of value, probably because these are the only currently developed systems. However, they fail to mention the possibilities that services like colored coins will bring to Bitcoin, as well as a host of other services that have yet to be built.

Thanks everyone for your comments and especially Bitcopia for a copy of the report.  It's weird that I pretty much agree with almost everything he says as to bitcoin's potential except for the numbers involved.  I don't understand how he gets such low numbers.  Bitcoin currently (at $1200) probably has 1% or less of the PP/WU/MG market.  But if it becomes an "average" player (which would imply 25% of the market or 25× that number), it's only $1300?  I get 1200*25 = $30,000.  And that's if it "just" does that.

And I could say the same about its comparison to silver/gold and undercutting Visa/MC, in which case I start to get up to $100,000 or more if it does all those things well.

But if rich guys keep selling when it gets close to $1300 because "that's what BofA/ML said", then at what point does the market become hardened to never exceed that price?