BCA: Bitcoin Closes In On $100,000, But The Ultimate Destination Is Over $200,000+

By Dhaval Joshi of BCA Research

Executive Summary

The value of both gold and bitcoin comes from their so-called ‘network effect’.
The network effect of both gold and bitcoin comes from the collective belief that they are the non-confiscatable assets to own in a fiat monetary system, as an insurance against hyperinflation, banking system failure, or state expropriation.
As global wealth rises, the value of the network effect of both gold and bitcoin will also rise.
But as bitcoin takes market share from gold, bitcoin has considerably more upside than gold.
Despite bitcoin’s election-fuelled rally, its 260-day complexity is not yet close to the 1.2 level that would signal the start of another crypto winter.
Hence, while we should expect a near-term retracement, bitcoin’s structural uptrend is intact with an ultimate destination of $200,000+
10-year T-bonds and Portuguese stocks are tactically oversold.

Back in 2021, I penned a report explaining why bitcoin was headed to $100,000+. Suffice to say, my $100,000+ forecast stirred a hornets’ nest, even here at BCA. The naysayers pushed back hard, claiming that bitcoin was a ‘Ponzi scheme’ or, at the very least, a dangerous bubble.

Yet three years on, my prediction has been vindicated both for its price forecast and its underlying justification. Now, with the bitcoin price closing in on $100,000, is it time to take profits? The answer depends on whether you are a trader or a long-term holder.

Bitcoin’s progress has always been two steps forward, one step back. After its recent surge, premised on the more ‘bitcoin friendly’ candidate winning the US presidency, we can expect some near-term retracement – as was the case in April this year. On a multiyear horizon though, bitcoin’s structural uptrend is intact and will ultimately take it to $200,000+ (Chart 1).

The Value Of Gold And Bitcoin Come From Their ‘Non-Confiscatability’

To understand the value of bitcoin we must understand the value of gold. With gold predominantly used as jewellery, many people think that the value of gold comes from its properties as a precious metal, especially the chemical inertness that keeps it eternally beautiful. But this is a misunderstanding.

The other precious metals that are gold’s neighbours in groups 10 and 11 of the periodic table – silver, platinum, and palladium – possess identical properties to gold. This means that we can quantify gold’s value as a precious metal as being gold’s relative scarcity versus, say, silver multiplied by the price of silver.

Today, gold is roughly eight times as scarce as silver, so gold’s value as a precious metal is the price of silver, $30/oz, times eight, which equals $240/oz. This comprises just 10 percent of gold’s current market price of $2550/oz (Chart 2).

Yet for centuries, the gold price did just equal its scarcity versus silver multiplied by the silver price. The relationship ended only when the world moved to a fiat monetary system in 1931, and then again in 1971. In a fiat monetary system, the gold price surges to many multiples of its scarcity versus silver (Chart 3).

This provides the compelling proof that in a fiat monetary system, most of gold’s value comes not from its use as a precious metal. Most of gold’s value comes from the network of marginal buyers who are holding it for what I call its ‘non-confiscability’. Unlike financial assets, bank deposits, or cash, the state cannot confiscate gold via fiat monetary inflation. This is ensured by gold’s limited supply. Nor can gold be confiscated by the higher risk of a banking system failure that a fiat monetary system aggravates.

Can we justify the price of gold instead by the high cost of mining it? No, the causality runs the other way. The cost of mining gold is driven by its market price, as miners grab the largest share of its selling price that they can.

What about central bank purchases of gold? Central bank reserves also hold gold rather than foreign fiat currencies for gold’s non-confiscatability. A foreign fiat currency can be confiscated via devaluation by its government or central bank, but gold cannot.

All of which brings us to two key points:

First, given that gold’s above-ground market value is $19 trillion,1 the majority, around $17 trillion comes from the network of holders who value gold for its non-confiscatability.

Second, just like gold, bitcoin cannot be confiscated by monetary inflation or banking system failure (Chart 4). Additionally, and
unlike gold, it is difficult for the state to confiscate it by outright expropriation. Yet bitcoin, with a market value of $1.5 trillion comprises less than 10 percent of the total market for non-confiscatable assets. As bitcoin’s share of this market increases, and the supply of bitcoins reaches its upper limit, bitcoin’s price has substantial upside.

The Value Of Bitcoin’s ‘Network Effect’ Has Substantial Upside

In essence, the value of both gold and bitcoin comes from their so-called ‘network effect’. A network effect creates a self-reinforcing cycle of value where each new user makes the network more valuable for everyone.

In the case of both gold and bitcoin, their network effect come from the collective belief that they are the non-confiscatable assets to own in a fiat monetary system. And that a certain proportion of total wealth must be held in these non-confiscatable assets as an insurance against hyperinflation, banking system failure, or state expropriation.

You might ask, what is the difference between a network effect based on collective belief and a Ponzi Scheme? The answer is that a Ponzi Scheme relies on an exponential growth of its network on a promise to get-rich-quick. Once that exponential growth ends, as it must, the value of the network collapses.

By contrast, gold’s network effect has existed in relatively stable form since 1971, and bitcoin’s network effect has existed for over ten years. And their entire raison d’être is an insurance against the get-poor-quick that comes from hyperinflation, banking system failure, or state expropriation.

The upshot is that we can value the gold and bitcoin networks as the product of three terms:

Global wealth
Global wealth share held in the non-confiscatable asset-class
Non-confiscatable asset-class share held in gold/bitcoin

For gold, this means that if global wealth rose by say, 20 percent in the coming 2-3 years and the global wealth share held in the non-confiscatable asset-class held constant, while bitcoin eroded the non-confiscatable asset-class share held in gold from 90 to 80 percent, then the gold price would nevertheless increase by about 7 percent. Under the same premise though, the bitcoin price would increase by about 140 percent3 to $200,000+.

What does our proprietary analysis of price trend complexity reveal for gold and bitcoin? Gold’s 260-day price rally complexity (fractal dimension) recently reached the point of collapse that has reliably signalled tactical retracements. This justifies our current tactical short position in gold (Chart 5).

In the case of bitcoin, its major structural downtrends – so-called ‘crypto winters’ – have started when the preceding rally’s 260-day complexity collapsed to a level of 1.2 (Chart 6).

Despite bitcoin’s election-fuelled rally, its long-term complexity has not collapsed to the level that would signal the start of another crypto winter. Hence, while we should expect a near-term retracement, bitcoin’s structural uptrend is still intact with an ultimate destination of $200,000+.

Loading…

Originally Posted at; https://www.zerohedge.com//

zerohedge
Economics , News , Politics , Science
December 7, 2024
2 views

The Miserable Cost Of An Open Border

Authored by Seth Barron via RealClearPolitics,

The Biden-Harris experiment in dissolving the U.S. border has wrought massive changes to American society, most of which will not be understood for years, if not decades. Since 2021, U.S. border officials have had at least 10 million “encounters” with migrants, many of whom were allowed to enter the country. There is no telling how many more aliens entered the country without encountering enforcement agents. The population of the United States may have increased by as much as 15 million people in just a few years.

This massive flow of humanity crosses multiple national borders, involves every mode of transportation, accounts for billions of dollars paid in fees to smugglers, and describes a fantastically complex economy of suffering and hope. In an effort to get a handle on this human tide, noted muckraker James O’Keefe – known for his hidden camera “gotcha” interviews with abortionists, media executives, progressive nonprofit executives, and other degenerate types – traces the migrant onrush from its source, and seeks to trace the machinery of profit and influence that is conducting it from great removes.

“Line In The Sand,” the resulting documentary, is a remarkable and humane exposition, revealing perspectives and images American audiences have mostly been prevented from seeing. O’Keefe and his intrepid team begin on the U.S. side of the Mexican border, where we witness migrants crossing the border through holes that their guides have cut in a fence that serves as a target as much as a barrier. Infrared cameras show dozens of illegal aliens streaming toward “pick-up” vehicles on the U.S. side while smugglers – presumably cartel members – a few feet away taunt O’Keefe and his group. “What if I were to run up to them right now, what would happen?” O’Keefe asks his guide. “I would highly advise you against that,” he is told, in a classic understatement.

The fact that coyotes and other human traffickers are paid to assist northbound migrants with their passage is no scandal; we all know what their motivations are and why they are doing what they do. But O’Keefe documents multiple examples of U.S. Border Patrol agents standing idly by while illegal aliens cross, virtually under their noses. “Why aren’t you doing anything?” he asks. “Have a good day, guys,” a border agent desultorily responds before driving off in the general direction of the episode. Later, a migrant stands in front of a Border Patrol truck, clearly trying to alert the agents of his intention to surrender, but is studiously ignored until O’Keefe and his team call their attention to him.

There is a kind of sad comedy in the operations of U.S. border security, and O’Keefe is not unsympathetic to the absurd position that border agents have been put in. Trained to defend the national border and to serve as the first line of defense of American soil, these agents have been recommissioned as a perverse Welcome Wagon for illegal aliens, charged with making their undocumented and uninvited entrance to the United States as commodious as possible.

Looking to get deeper into the heart of this migratory avalanche, O’Keefe went deep into Mexico, to the city of Irapuato, about 150 miles northwest of Mexico City. Irapuato is a popular railway junction where thousands of migrants climb aboard “La Bestia,” or “The Beast,” a cargo train that chugs northward toward the United States. In the film’s most remarkable footage, O’Keefe and his team join with migrants, mostly from South and Central America, to ride The Beast, also known as “el Tren del Muerto,” or the Train of Death. O’Keefe talks to the migrants without condescension, asking them their destinations and what they plan to do when they get there, and their concerns about the perilous nature of the journey. We see the film crew race to jump on a moving train and clamber on top to sit in a pile of coal; O’Keefe is shocked at how truly dangerous this small element of the trip is and sympathizes with the migrants’ difficult choices. These scenes are among the film’s most affecting, along with the crew’s random encounter with a little girl who had just crossed the border after journeying from Guatemala by herself. There is a human dimension to illegal immigration, and O’Keefe does not ignore it.

However, there is also an impersonal dimension to this massive population transfer, and O’Keefe determinedly aims to uncover it – to put a face to the institutions and administrators that benefit from the rough injection of millions of people into American society. From government agents to bus companies to nonprofit resettlement groups to private contractors running huge, walled compounds housing thousands of children, O’Keefe doggedly tries to penetrate the mechanics of a system that resolutely hides itself behind a screen of silence, usually in the name of “safety” and “privacy.”

Some of the film’s more comical moments pertain to these segments, such as when the team follows some just-arrived Chinese migrants in San Diego to an employment agency, where other Chinese aliens, already in the country for several months, complain that it’s much harder to live in the United States than they had imagined. O’Keefe tries to sniff out a connection between the owner of the agency and more powerful actors, but it emerges that there really isn’t much going on; in fact, the owner asks O’Keefe if he knows of a way to apply for government grants.

Elsewhere, O’Keefe tries to get information about the operations of several huge residential centers for unaccompanied minors and tries to spin their refusal to give him access to the centers or submit to interviews as evidence of the existence of vast, government-funded child sex trafficking networks. But it seems more likely, though no less troubling, that the open borders policy of the last four years has created a tremendous humanitarian crisis of alien children roaming the continent by themselves, and the government is probably trying to keep them from becoming prey to sex traffickers while they sort out where to send them. Though O’Keefe does not uncover a salacious network of child predators, his vigorous pursuit of the truth does reveal the existence of a large, shadowy, government-funded, and lucrative system of child “welfare.”

So, “Line In The Sand” is correct in the larger sense that billions of dollars are being spent managing this human flow, and many people are getting rich off of it. The last thing these parasitical administrators of the nonprofit industrial complex want is for the border to close. O’Keefe does a great job of capturing in real time the corruption of a local New York City nonprofit called La Jornada, whose leader, Pedro Rodriguez, evidently perpetrates fraud, demanding fees for services that the city provides for free. O’Keefe also sends a Spanish-speaking reporter undercover into the Roosevelt Hotel, New York City’s main processing center for newly-arrived migrants, which offers him free housing, medical care, and even airplane tickets, even though the reporter explains that he has no identification of any sort. How, O’Keefe asks, in our post 9/11 security-obsessed era, are we to make sense of a system that admits millions of unvetted foreigners into the country, and then offers to fly them anywhere they care to go?

“Line In The Sand” is rough in parts, but intentionally so. Its subject is so sprawling and tangled that a neat and clean representation would be a lie. Even with a nine-figure budget – which this film assuredly did not have – a documentary about the border and the 30 million-footed human swarm that has crossed it would be messy and incomplete. But James O’Keefe and his small team have done something remarkable. They have taken on the decade’s biggest story, given it form, and preserved the humanity of its subjects. It is worth watching.

Seth Barron is a writer in New York and author of the forthcoming “Weaponized from Humanix.”

Tyler Durden
Sat, 12/07/2024 – 17:30