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.
Then, 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 bitcoin 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. The average investor hasn’t heard of ethereum yet (not to mention interesting projects like Golem, Gridcoin, Waves and thousands of 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 (and current coin ratios stay the same), that would put the price of bitcoin (BTC) around $40,000. If we hit 50% of the U.S. GDP, we’d be at $204,216 per bitcoin. At 101% of U.S. GDP, we’d be looking at a future bitcoin price of $408,432.
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.
Side note: The U.S. debt-to-GDP ratio for Q4 2017 stands at 104 percent. Perhaps the true bubble is in 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.