In Goldman Sachs’ 2018 Investment Outlook, the firm argues the bitcoin and cryptocurrency “mania” already dwarfs the famous Dutch “tulipmania” in the 1600s and the March 2000 dot-com bubble.
At the very end of the piece, they include this gem:
At the peak of the dot-com bubble in March 2000, the combined market capitalization of Nasdaq and S&P 500 information technology stocks was 101% of U.S. GDP and 31% of world GDP. The aggregate market capitalization of cryptocurrencies is 3.2% of U.S. GDP and 0.8% of world GDP.
If there’s one thing I’ve learned in more than a decade of investing in various assets, it’s this: markets go higher and fall lower than we generally imagine they will. While I don’t see cryptocurrencies ever hitting 101% of the U.S.’s GDP, I still envision at least one more extraordinary rise in prices for cryptocurrency.
Why? Because the public still thinks of crypto as a currency and a currency alone. The average investor hasn’t heard of ethereum yet (not to mention interesting projects like Golem, Gridcoin, Waves and more than 1,000 others). 2017 was the year of bitcoin. 2018 will be the year of blockchain.
My personal target is a $2 trillion market cap for all cryptocurrencies. If we hit that number, we’d be at just 10% of the $20 trillion U.S. GDP. Under that scenario (assuming current coin ratios stay the same), the price of ethereum (ETH) would be around $4,004. If we hit 50% of the U.S. GDP, we’d be at $20,232 per ethereum. At 101% of U.S. GDP, we’d be looking at a future ethereum price of $40,464.
I don’t disagree with Goldman. We’re in the midst of an extraordinary bubble. I just disagree that we’ve already seen the top. The best is yet to come.
Side note: The U.S. debt-to-GDP ratio for Q4 2017 stood at 104 percent. Perhaps the true bubble we’re witnessing is government debt.
Caution: This post is does not account for currency inflation. Price predictions were calculated as if the total coin supply were capped at the time of publication.