“Bitcoin is thrown to the wolves,” the headline reads, punctuating the tail end of Saxo Bank’s prediction that the bitcoin price will soar above $60,000 in 2018 before crashing more than 98 percent to “its fundamental ‘production cost’ of $1,000.”
The Danish investment bank issued this forecast in its annual “Outrageous Predictions” publication that purports to identify “highly unlikely events with underappreciated potential.”
“The rise of Bitcoin and other cryptocurrencies has been one of the most spectacular phenomena of financial markets in recent years,” two Saxo analysts write. “Bitcoin will continue to rise – and rise high – during most of 2018 but Russia and China will together engineer a crash.”
The bank predicts that fueled by prolonged bullishness over the advent of bitcoin derivatives, the bitcoin price will rise approximately 400 percent from its current level to peak above $60,000 — bringing its market cap to $1 trillion.
However, Saxo warns, bitcoin’s meteoric ascent will be equaled by the rate of its demise. Concerned about capital flight, China and Russia will unleash a multi-pronged assault on the decentralized cryptocurrency ecosystem to “shift the focus away from Bitcoin”. In addition to creating their own, state-backed cryptocurrencies, the two governments will ban mining, citing environmental concerns even though their true priority is keeping a handle on domestic monetary policy.
Bitcoin diehards will not give up without a fight, but the bank predicts that state-run cryptocurrencies will prove to function better as actual payment systems, putting an end to the two-year crypto craze and causing the bitcoin price to careen down to $1,000.
“The smoother functioning of the state-run protocols for actual payments and price stability, as well as the heavy hand of state intervention, drives a decreasing interest in all cryptocurrencies and completely sidelines the Bitcoin and crypto phenomenon from a price speculation angle even as the technological promise of the blockchain gallops on,” Saxo concludes. “After its spectacular peak in 2018, Bitcoin crashes and limps into 2019 close to its fundamental “production cost” of $1,000.”
Remember, these predictions are somewhat tongue-in-cheek — the bank deliberately concocts unlikely scenarios. However, Saxo did foretell “huge gains for bitcoin” in last year’s edition, although the bank’s “outrageous” prediction that bitcoin would rise as high as $2,100 has proven to be shockingly conservative.