Bitcoin Is ‘Fragile’, But Remains ‘Significantly Undervalued’ — Ronnie Moas
Editor's Note: View Kitco News' full 2018 outlook coverage
(Kitco News) - As bitcoin continues its on-and-off again rally, one digital currencies expert describes the crypto space as “fragile,” but believes that bitcoin is “significantly undervalued” and might easily see a $28,000 target in 2018.
After reaching an all-time high of nearly $20,000 on December 17, bitcoin retreated to mid-$18,000 levels, where it has been sitting since, last seen at $18,734 – an advance of about 1,800% year-to-date.
These unprecedented gains represent just the beginning of bitcoin’s journey, according to Ronnie Moas, founder of Standpoint Research.
“Ninety-nine percent of people in the world are not even involved yet. What happens when this hits 4-6% penetration and there is no supply to satisfy the demand? That is when you will see the price go towards six figures,” Moas told Kitco News in a recent interview.
Yet, Moas’ 2018 projections are much more conservative — with his target ranging from $14,000 to $28,000.
Moas recognizes that the whole crypto space is very volatile and uncertain, explaining that there is no guarantee that bitcoin will remain “at the top of the mountain.” And whether it sinks or swims will be based on consumer confidence.
“The minute the confidence is shaken, prices could come down really hard. There could be a panic, where people will rush for the exits and you could see a collapse in bitcoin. This is a fragile situation,” he noted. “A lot of people are sitting on millions of dollars in profits right now and the minute they think this is going to crack, they are all going to sell at the same time.”
This has already happened a few times this year, with prices dropping by a couple of thousands within a period of few days.
Numerous concerns remain with bitcoin, including how the regulators will decide to deal with the cryptocurrency, how the tax authorities will approach this space, and threats posed by hacking attempts, Moas pointed out.
But, Moas is optimistic on this front. “Whatever the obstacles are in bitcoin right now, they will probably get knocked out sooner or later. Once we get past these growing pains, there is a lot to be excited about.”
He also recommends people diversify in order to protect their investments against the worst case scenario. “One way to do that is by holding on to the bitcoin spinoffs. One of the names that could knock bitcoin off will be those of bitcoin cash or bitcoin gold,” he said.
Moas compares bitcoin to gold, pointing to the digital currency’s limited supply as one of its best characteristics.
“I don’t know how much gold there is in the ground. I know how much bitcoin there is. And I also know that in a couple of years you might have a situation where there are millions of people trying to get their hands on bitcoin, but there will be no reaction from the supply side of the equation because the supply can’t be tampered with.”
In terms of what will drive bitcoin prices in 2018, the story will remain similar to what happened this year, Moas said.
“People are opening up new crypto accounts every week. I expect 80 million new accounts to be opened in 2018. When demand keeps going up, but no one is willing to sell their coins, the prices will keep going higher.”
Increasing interest in bitcoin throughout this year has taken away the allure from other assets, Moas added.
“The money has to be coming from somewhere. If people are buying bitcoin right now, they are either taking money from their bank accounts, their stock accounts, their bond accounts, or their gold accounts. An argument can be made that people are selling their homes right now in order to buy bitcoin,” he said.
Most of the money in the cryptocurrency markets is still coming from Asia, according to Moas. “The big wave of buying in the U.S. hasn’t arrived yet. Once it will, we might see more money coming out from the stock market. It is only a matter of time before this hits Wall Street in a big way.”
The fact that the value of bitcoin in circulation is more than $200 billion cannot be ignored, according to Moas.
“If bitcoin can fulfill the promise that people have in it, it probably deserves to be trading near where gold is on the valuation basis,” he said. “If bitcoin holds onto its market share it could put the price at $144,000 per token within the next 3-5 years. All that would require is a repeat performance of what we just had. My forecast is conservative.”