How Bitcoin Will Move Over The Next Two Years

Aug 14, 2020

Apurva Sheth, Editor,Profit Hunter Pro

I regularly get queries and comments on bitcoin. It's an exciting fast profits opportunity after all.

I have kept a close watch on the price of bitcoin so that I could let you know about any trading opportunity.

After much analysis I believe I have identified the long term market cycle of bitcoin.

In this video I'll tell you all about it.

Let me know your thoughts in the comments. I love to hear from you.

Hi, I'm Apurva Sheth and I welcome you to latest edition of Fast Profits Daily.

Two weeks ago, I spoke about bitcoins and how various global macro factors were affecting bitcoins. Bitcoins have been on the move over the last few months after gold and silver. Now, over the last couple of days I have been tracking bitcoins closely and I have noticed something very interesting in bitcoins and this would have consequences on how bitcoins could move next 1 to 2 years.

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So today I want to share my insights with you on bitcoins and let me tell you, these insights I have got, have simply blown my mind away. So I am sure that this will also be very intriguing and interesting for you and it could also be a good a profit making opportunity for you. So don't miss this.

Now, for those of you don't know what bitcoins are, I'd like to brief you about what bitcoins are exactly but if you want to know more about them in detail, then you can check out the previous videos and you will find the links of these videos in the transcript section below. So there are about 2 to 3 videos which will give you more details about bitcoins.

Now, bitcoin is the world's first decentralised digital currency. Now what does this mean? Well, in a traditional banking system, there is a centralised issuing authority, which issues currency in our case, it is the RBI. In US it is the Federal Reserve. So these central government's issues their countries currency and there are banks within the country which record transaction or which maintains ledger of transactions between depositors and borrowers and they charge a fee for the sam.

But in Bitcoins, this is completely different. It is a decentralised system. So there is no issuing authority and there is there aren't any banks which maintain records. So who does all the work of verifying these transactions? Well, these are people who have deployed computer systems to verify these transactions.

Now this, the process of verifying the transactions, is a complex process, and it takes a lot of effort to do it. So, people who do this thing are called miners and when a miner solves the problems for the process of verifying these transactions, you have to solve complex mathematical problems and if you are the one who solves this problem before anyone else, then you get a reward. Now this reward when you add a transaction it is known as a block, and when you add series of these blocks to the chain, it is known as blockchain.

Now, for anyone who gets this reward for adding a block will get bitcoin as a reward. So, when bitcoins were launched, the reward for adding one block was of 50 bitcoins and over the years, the reward is halved. So when bitcoins were launched, we would get 50 bitcoins as a reward. In 2012 the reward was halved to 25 bitcoins. In 2016 the reward was halved to 12.5 bitcoins, and more recently, in May 2020, the reward for adding one block to the chain was reduced again to half to 6.25 bitcoins. So this process of halving will continue till the last bitcoin will be mined which will be somewhere in the year 2,140.

So this limits the supply of bitcoin and this is the reason why bitcoins are in demand and they shoot up the over a period of time. Now this is in comparison to any other central bank which keeps on spending money when there are economic problems or recessions. This does not happen with bitcoins. The process of or the supply of bitcoin will always be limited. This number is about 21 million bitcoins. So there will only be 21 million bitcoins that will be mined. So if the supply is limited, then over a long the period, the chances of the price rising are higher.

Now the thing which I found in Bitcoins and which is the most intriguing is that bitcoins, despite being a new currency, also goes to the same rules which applies to stocks, commodities, bonds, and currencies, and these rules are the rules of markets and markets goes through phases of greed and fear, bull and bear phases. So similarly, bitcoins also go through similar phases. Now let's see what does all this mean.

 

So here on your screen you can see the long-term chart of bitcoin. This is the chart from 2010. That's when the first bitcoins were mined and started trading. So this is from 2010 till the most recent time period. So now this green line represents the first halving process which happened on the 28th of November 2012 and this process of halving nearly happens every four years. So the second halving took place on 9th of July 2016 and the third and the most recent one, happened on 11th of May 2020.

Now I have noticed that within these four-year periods, bitcoin goes through a period of bull and bear phases. Now during the bull phase, they move up and during bear phase, they consolidate or fall. In this case, bitcoins have not fallen and so I have broken down these four-year phases into two halves. One is the greed phase and the other one is the fear phase.

So this red line represents the change from greed phase to fear phase and similarly, here as well, the redline presents the shift from greed phase to fear phase. So what happens during the greed phase?

You will notice that during the greed phase, bitcoins generally tend to move up and in the first greed phase out here between 2012-14 bitcoins moved up by a whopping 3313%. In the next fear phase, they moved up by only 54%. The next greed phase, they moved up by 943% and in the most recent fear phase, they moved up by only 27%. Now, bitcoins are again entering its greed phase, which could probably last in the July 2022. So during the next 1 to 2 years, I believe bitcoins could again witness a huge rally and this is what we have observed during the previous two greed phases as well. Immediately after the halving process happens bitcoins tend to move up. This could be the case this time around as well.

Now I have recorded similar videos on greed and fear cycles in auto index, in the IT index, in the Sensex, and watching this happen in bitcoins as well has simply blown my mind because it is a completely new currency and market rules or the rules of greed and fear cycle or the bull and bear phase are applying on a volatile asset like bitcoins is something very interesting and it would also be more interesting to see how bitcoins perform for the next 1 to 2 years when they are in the greed phase.

So if you are looking for an investment in bitcoins, this could be probably be the best phase to get in but before you do that I'd like give you a word of caution bitcoins or crypto currencies are very volatile space to be, and before you invest in them do take necessary precaution, and I would normally recommend everyone to put only a small portion of the investments into bitcoins or cryptos because they are very volatile and they are new, so there could be a lot of ups and downs and drawdowns are very sharp. So you don't want to be in a situation where in you wake up one morning and you see bitcoins crashing by 20-30%.

So do take necessary precautions and if you are very risk averse investors and you don't want to invest in bitcoin, that is completely fine but do watch out for this chart and do look out for what happens in the bitcoins in the next 1 to 2 years. Bitcoins or blockchain is a technology which a lot of companies are accepting and developing on. So the future of this technology could be bright, and there might be a lot of opportunities in equities related to this technology. So you must keep an eye on blockchain technology and bitcoins.

So that's all from me for today. I hope you enjoyed watching this video. If you liked it, then please share it with your friends and family members. If you're watching this video on YouTube then you can also send in your comments and feedback about how did you find this video and what would you like to see next. We also have a telegram channel wherein I share my insights on the markets on a daily basis. So you can sign up to the Telegram channel as well. It's absolutely free and you can find our channel with the handle Equitymaster official. So that's all from me for today. I hope you enjoyed watching this video. Thanks a lot and have a nice day.

Stay safe and have a great weekend!

Warm regards,


Apurva Sheth
Senior Research Analyst, Fast Profits Report
Equitymaster Agora Research Private Limited (Research Analyst)

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4 Responses to "How Bitcoin Will Move Over The Next Two Years"

PREMKUMAR R

Aug 17, 2020

Good information. No plans to go for it.

Like 

Abhinay Udnur

Aug 17, 2020

Sir, thank you for this wonderful article. I request you to suggest some good crypto trading sites.

Like 

ALOK KUMAR

Aug 16, 2020

I want to invest in bitcoin. What is the opportunity I can have in this.
Alok

Like 

MILIND

Aug 14, 2020

This one is really a good information.
Please share more information on how and where to invest for the Bitcoin.

Thanks

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