Can Bitcoin sustain a high price? Does my math check out? Is this valid logic?

[BitcoinNewbie15]

Hey guys, I have been thinking about this frequently with Bitcoin. I wanted to post this thread so I could have a discussion with those that are more knowledgeable than myself. I am curious as to what the implications of Bitcoins block rewards would be if say Bitcoin reaches $50k for example.
Obligatory disclaimer: I am a Bitcoin bull and am very passionate about Bitcoin. I am not trying to FUD in any way shape or form. I just want to have an open discussion as this is something I have been thinking about for a while.

With the block halving two years out, my math will be based on the current block reward. If Bitcoin hits a $50k price point then the market cap would be around $875 Billion. I think this is doable, as this would put it within range of Apples market cap. However, with Bitcoin's block reward being 12.5 currently, that means each block reward would be $625,000. This comes out to $90 million per day on average. This is an insane amount of money. There has to be new money constantly coming in to buy up these coins, right? Otherwise, the market would just slowly bleed money. At least that is my understanding of this So with that being said, $90 million per day works out to about $33 Billion a year. So if I understand correctly, there needs to be $33 Billion dollars each year buying up Bitcoin so the price can sustain $50k.

Now, we can assume every miner won't sell every coin and there will be some hoarding taking place. With that being said, let's assume every miner will only sell enough to cover the cost of production. We have no clue what cost of production will be in the future, so lets say its 50% of the Bitcoins price.  Even then this would still work out to $16.5 Billion yearly. Also, even after the block halving this would be $8 Billion per year. Is this something that is even possible? These numbers are very large, it doesn't seem too feasible to me. I remember people arguing this when Bitcoins block reward used to be 25, but the $ amount back then was really small. $Billions of dollars is a lot of money.

What do you guys think? Is my thought process flawed? Is it possible Bitcoin could sustain a price like this?

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[figmentofmyass]

If Bitcoin hits a $50k price point then the market cap would be around $875 Billion. I think this is doable, as this would put it within range of Apples market cap.

what's apple's market cap have to do with anything? those figures sure make apple seem incredibly inflated (or bitcoin incredibly undervalued), don't you think?

Now, we can assume every miner won't sell every coin and there will be some hoarding taking place. With that being said, let's assume every miner will only sell enough to cover the cost of production. We have no clue what cost of production will be in the future, so lets say its 50% of the Bitcoins price.  Even then this would still work out to $16.5 Billion yearly. Also, even after the block halving this would be $8 Billion per year. Is this something that is even possible? These numbers are very large, it doesn't seem too feasible to me. I remember people arguing this when Bitcoins block reward used to be 25, but the $ amount back then was really small. $Billions of dollars is a lot of money.

What do you guys think? Is my thought process flawed? Is it possible Bitcoin could sustain a price like this?

the gold market is worth $7 trillion. the stock market is worth $30 trillion. what we're talking about is a drop in the bucket. the money doesn't need to be printed out of nowhere; it will come from other asset markets.

[BitcoinNewbie15]

If Bitcoin hits a $50k price point then the market cap would be around $875 Billion. I think this is doable, as this would put it within range of Apples market cap.

what's apple's market cap have to do with anything? those figures sure make apple seem incredibly inflated (or bitcoin incredibly undervalued), don't you think?

I was just using it as a point of reference for valuation. Considering Bitcoin became worth more than many other major companies in 2017 very easily, and its not a company but more of a global commodity, it seems likely that it could come within range of apples market cap. I said it was doable, I wasn't saying it was impossible or unlikely. Yes I agree Apple is grossly over-inflated.

the gold market is worth $7 trillion. the stock market is worth $30 trillion. what we're talking about is a drop in the bucket. the money doesn't need to be printed out of nowhere; it will come from other asset markets.

Sweet. This is what I was looking for. I don't think too much money would be divesting from the stock market to invest into Bitcoin though. Bitcoin is more like a commodity, apples to oranges, would you agree? With that being said though, even if a small percentage, say .1% of money from stocks move into Bitcoin that would be quite significant. As far as gold, I can definitely see a lot of money shifting from gold to Bitcoin.

[cellard]

For me it's simple, judging by the following premises:

1) Bitcoin is a better gold already? True: It is. Gold is pretty useless in the information age as a store of value, can be easily confiscable, extremely expensive and slow to move (compared to Bitcoin)
2) Is Gold's marketcap mostly because of store of value use? Yes: It is. Most of the value is due its reserves, not because of its use as an actual material which is a tiny amount compared to hodling it as a neutral safe haven.
3) Is Gold's mining more expensive than Bitcoin? Yes by a long shot, yet, even if Bitcoin is better, Gold has no problem sustain it's multi trillion dollar marketcap.

So Given 1 2 and 3 it's only a matter of time the rest of the world aligns with these facts and Bitcoin reaches an higher marketcap than Gold, therefore: hodl. This is how you get rich, you stick to what you think is right than other people don't get and as long as you still think your analysis is correct it means you have and advantage and you just have to be patient, time will tell.

[davis196]

Why do you focus only on block rewards?The miners get revenue from the transaction fees+block rewards and we don`t have to worry about their revenue and profits.If the BTC price goes down and mining becomes unprofitable,some miners will switch to altcoins,other will just leave.This will re-balance the market`s transaction fees so the remaining miners will get enough profits to continue mining bitcoins.The BTC price will reach 50K USD if the demand keeps raising,this is common sense and every market needs new money,coming from outside to keep the prices pumping.

[Pursuer]

If Bitcoin hits a $50k price point then the market cap would be around $875 Billion. I think this is doable, as this would put it within range of Apples market cap.

you are doing two things wrong here.
first is that you make the conclusion based on nothing because market cap is nothing. it is a meaningless number for cryptocurrencies.
second you are comparing that meaningless number with a meaningful number which is Apple's market cap. Apple is a company and market cap is defined for companies. bitcoin is a currency and there is no market cap for currencies. try finding out what the market capitalization of US dollar is. you can't find anything because it does not exist! you can use money supply in a weird way though: en.wikipedia.org/wiki/Money_supply#United_States then compare THAT with bitcoin.

However, with Bitcoin's block reward being 12.5 currently, that means each block reward would be $625,000. This comes out to $90 million per day on average.

not sure how you are calculating these numbers! bitcoin price is currently $6700ish
12.5 * $6700 = $83,750 per block
24 hours/day * 6 blocks/hour * 12.5 BTC/block = 144 blocks/day * $6700 = $964,800
you can round this up to $1 million. where did you get $90 million from?

This is an insane amount of money. There has to be new money constantly coming in to buy up these coins, right?

this didn't start yesterday. this has been going on from day 1. new coins are being created each day and come into circulation. it started with 50BTC per block or 7200BTC per day and it has been over 2 years that we see 1800BTC being created every day. market IS at a balance whether it is $90 million or $1 million.

[pawel7777]

...
However, with Bitcoin's block reward being 12.5 currently, that means each block reward would be $625,000. This comes out to $90 million per day on average.

not sure how you are calculating these numbers! bitcoin price is currently $6700ish
12.5 * $6700 = $83,750 per block
24 hours/day * 6 blocks/hour * 12.5 BTC/block = 144 blocks/day * $6700 = $964,800
you can round this up to $1 million. where did you get $90 million from?

He's clearly talking about the hypothetical $50k per 1 BTC scenario ($625k/12.5=$50k).


I agree there's a common-sense limit on BTC price expectation. I don't see how BTC could reach sustainable ~$50k without making a significant improvement in terms of adoption and usability. So we'd need either: 1) BTC establishing itself as a currency of alternative global economy (where large number of people actively spend & earn in BTC); or 2) some apocalyptic scenario, i.e. global financial system collapse, where people lose faith in fiat currencies altogether.

Of course, BTC could hit even $100k with market manipulation/speculation alone, but I wouldn't expect cryptos surviving for very long being only a speculative assets.

[dothebeats]

You're right, the market needs to constantly pump in billions of dollars every year just so the market could stay afloat within $50k ranges, however, there are no definite sum of money that needs to go in the market in order for the price to maintain its throne. There are times wherein a huge selling pressure is present and there are also times that the market seems calm and all are in the green. Methinks that $50k is definitely reachable, though the word sustainable isn't.

As for the block reward being halved, always remember that machine prices adjust according to what's the current bitcoin price, so again, there's no general way of getting the average expenses mining operators might face in the next ~2 years.

[Denker]

Just to give you perspective of how much money is out there.
Gold market - 7trillion USD
Global stock market - 70trillion USD
Global money supply (broad money) - 90trillion USD
Global real estate - 220trillion USD
Offshore tax haven accounts - 30trillion USD
Derivatives market - freaking huge!!!!!

There is enough money out there to push Bitcoin to crazy highs!
That's the last thing I'm worried about. It's just a question of time.

[pawel7777]

Just to give you perspective of how much money is out there.
Gold market - 7trillion USD
Global stock market - 70trillion USD
Global money supply (broad money) - 90trillion USD
Global real estate - 220trillion USD
Offshore tax haven accounts - 30trillion USD
Derivatives market - freaking huge!!!!!

There is enough money out there to push Bitcoin to crazy highs!
That's the last thing I'm worried about. It's just a question of time.

So BTC current marketcap is already 1.6% of that of gold's (few years back this would be considered a wet dream) and 0.16% of total broad money (if your numbers are correct). I'd say that's already a lot.

It's crazy to assume, that just because there's a lot of money in the world, all the money will flow into Bitcoin for no particular reason.

[figmentofmyass]

the gold market is worth $7 trillion. the stock market is worth $30 trillion. what we're talking about is a drop in the bucket. the money doesn't need to be printed out of nowhere; it will come from other asset markets.

Sweet. This is what I was looking for. I don't think too much money would be divesting from the stock market to invest into Bitcoin though. Bitcoin is more like a commodity, apples to oranges, would you agree? With that being said though, even if a small percentage, say .1% of money from stocks move into Bitcoin that would be quite significant. As far as gold, I can definitely see a lot of money shifting from gold to Bitcoin.

it's simple diversification hedging strategy.

if you're storing value/hedging risk in stocks or commodities (or anything else at all), it's perfectly reasonable to re-allocate a small percentage into crypto as it becomes a traditionally accepted asset class.

the "apples to oranges" bit doesn't matter if the purpose of the investment is value storage. so much of the world's "value" is only held where it is because it has to go somewhere.

[bedulook]

Bitcoin block and miners payout are base on the difficulty of mining. What if we assume all miners decide not to sell their profit but keep it for a future time,then bitcoin will be scarce to make the price higher

[Pursuer]

...
However, with Bitcoin's block reward being 12.5 currently, that means each block reward would be $625,000. This comes out to $90 million per day on average.

not sure how you are calculating these numbers! bitcoin price is currently $6700ish
12.5 * $6700 = $83,750 per block
24 hours/day * 6 blocks/hour * 12.5 BTC/block = 144 blocks/day * $6700 = $964,800
you can round this up to $1 million. where did you get $90 million from?

He's clearly talking about the hypothetical $50k per 1 BTC scenario ($625k/12.5=$50k).


I agree there's a common-sense limit on BTC price expectation. I don't see how BTC could reach sustainable ~$50k without making a significant improvement in terms of adoption and usability. So we'd need either: 1) BTC establishing itself as a currency of alternative global economy (where large number of people actively spend & earn in BTC); or 2) some apocalyptic scenario, i.e. global financial system collapse, where people lose faith in fiat currencies altogether.

Of course, BTC could hit even $100k with market manipulation/speculation alone, but I wouldn't expect cryptos surviving for very long being only a speculative assets.

oh, I missed that!

more than a year ago when price was below $1000 the same situation was going on.
12.5BTC being generated each day which was $1.8 per day. people weren't even imagining that in a year this would rise up to $36 million per day. but it happened.
2 years ago this was not even $1 million per day. and before that it was even lower even though reward was 25BTC per block.
currently the daily trading volume of bitcoin is in billions of dollars per day (between $3-5 billion) so why is it so hard to see price go up 2.5x from the last ATH? we are still far from mass adoption. there is only 1% or less of the whole world who have invested in bitcoin if that number increases to 2% price should go to $50k!

[Lucius]

Just to give you perspective of how much money is out there.
Gold market - 7trillion USD
Global stock market - 70trillion USD
Global money supply (broad money) - 90trillion USD
Global real estate - 220trillion USD
Offshore tax haven accounts - 30trillion USD
Derivatives market - freaking huge!!!!!

There is enough money out there to push Bitcoin to crazy highs!
That's the last thing I'm worried about. It's just a question of time.

Impressive numbers, there is hundreds of trillions $ out there, and if just a small percentage go into the market of crypto there is no doubt that the price of 1BTC will be hundreds of thousands $. As you say it is only question of time, but we as humans have limited life time so I hope that great things will start to happen in next 5-15 years.

2 years ago this was not even $1 million per day. and before that it was even lower even though reward was 25BTC per block.
currently the daily trading volume of bitcoin is in billions of dollars per day (between $3-5 billion) so why is it so hard to see price go up 2.5x from the last ATH? we are still far from mass adoption. there is only 1% or less of the whole world who have invested in bitcoin if that number increases to 2% price should go to $50k!

Only some 0.5-1% of world populatuion is using BTC, this is so low number and on the other side we have very good price so I think that it shows the potential of cryptocurrency. Better secured exchanges, more friendy use wallets, implementation of Lightning Network and regulated status of cryptocurrency in most world countries, I think we can have more then 2% of users in near future.

[vibingpositively]

Just to give you perspective of how much money is out there.
Gold market - 7trillion USD
Global stock market - 70trillion USD
Global money supply (broad money) - 90trillion USD
Global real estate - 220trillion USD
Offshore tax haven accounts - 30trillion USD
Derivatives market - freaking huge!!!!!

There is enough money out there to push Bitcoin to crazy highs!
That's the last thing I'm worried about. It's just a question of time.

So BTC current marketcap is already 1.6% of that of gold's (few years back this would be considered a wet dream) and 0.16% of total broad money (if your numbers are correct). I'd say that's already a lot.

It's crazy to assume, that just because there's a lot of money in the world, all the money will flow into Bitcoin for no particular reason.

But it isn't for no particular reason though. Bitcoin is a superior kind of money, one that is resistant to censorship and is neutral on who participates. Given all the properties of Bitcoin, if you ELI5'ed (explain like 5yr old) it to somebody it would be hard for them to resist what lays in front of them. That is why I think reaching the market cap of gold will not only be easy, but inevitable.

And it is a lot already yes, but just because it is so, doesn't mean the growth will stop. Look at the number of hedge funds entering the space in the last year, I bet they have tons of $$ behind and they simply can't enter the market effectively yet. I don't think we seen the last of Bitcoin making a huge run, the only question I ponder is this sustainable long term? I hardly want Bitcoin to reach 100k+ then to come back down to 5k, I would like it to remain there and become worldwide accepted currency.

[richshopgh]

Bitcoin can sustain a higher price than what it was seen as last year December but the uncertainty of its current price Make it not possible

[andrei56]

Hey guys, I have been thinking about this frequently with Bitcoin. I wanted to post this thread so I could have a discussion with those that are more knowledgeable than myself. I am curious as to what the implications of Bitcoins block rewards would be if say Bitcoin reaches $50k for example.
Obligatory disclaimer: I am a Bitcoin bull and am very passionate about Bitcoin. I am not trying to FUD in any way shape or form. I just want to have an open discussion as this is something I have been thinking about for a while.

With the block halving two years out, my math will be based on the current block reward. If Bitcoin hits a $50k price point then the market cap would be around $875 Billion. I think this is doable, as this would put it within range of Apples market cap. However, with Bitcoin's block reward being 12.5 currently, that means each block reward would be $625,000. This comes out to $90 million per day on average. This is an insane amount of money. There has to be new money constantly coming in to buy up these coins, right? Otherwise, the market would just slowly bleed money. At least that is my understanding of this So with that being said, $90 million per day works out to about $33 Billion a year. So if I understand correctly, there needs to be $33 Billion dollars each year buying up Bitcoin so the price can sustain $50k.

Now, we can assume every miner won't sell every coin and there will be some hoarding taking place. With that being said, let's assume every miner will only sell enough to cover the cost of production. We have no clue what cost of production will be in the future, so lets say its 50% of the Bitcoins price.  Even then this would still work out to $16.5 Billion yearly. Also, even after the block halving this would be $8 Billion per year. Is this something that is even possible? These numbers are very large, it doesn't seem too feasible to me. I remember people arguing this when Bitcoins block reward used to be 25, but the $ amount back then was really small. $Billions of dollars is a lot of money.

What do you guys think? Is my thought process flawed? Is it possible Bitcoin could sustain a price like this?

Interesting numbers, but according to coinmarketcap.com the current volume of bitcoin is 5 billion dollars just in the last 24 hours, even if we assume that a majority of that volume is faked or just speculation there is a lot of money moving in bitcoin and 33 billions per year just to buy new coins does not seems to be out of the realm of possibilities.