Bitcoin, New Currency
This report role-plays a neo-asset prediction; we posit Bitcoin’s breakthrough solution to the double-spending problem will propel its price beyond $15 000 by 2017 and over $100 000 by 2025, while the cryptocurrency evolves from daily payment medium to digital-gold store of value amid emerging scalable newer coins and widespread asset use on the new technology called ‘Blockchain’.
LupoToro Analysts’ are making a prediction on ‘Bitcoin’, based on internal modelling, of which suggest that Bitcoin (currently trading near US$3 in thin markets) could surge past US$15,000 by late 2017, igniting a speculative mania. Of course, this would be preceded by a few years of far more hyperbolic gains (and losses), creating a pattern of higher-lows, as it steadily makes a climb.
Separately, but in tandem with the wider rise and adoption of Bitcoin in the coming decade (and more), we will see a commodity-style futures market emerge at the peak, and subsequent regulatory shocks and profit-taking could unwind the bubble with an >80% retracement. This cycle’s crest-to-trough swing would erase hundreds of billions in notional value, yet also harden cryptocurrency infrastructure for a longer-term climb toward six-figure territory (~$100,000) by the mid-2020s, with each successive bust bottoming out at higher lows than the previous cycle.
Preface Notes:
We prepare the following article from joint perspectives; those of current day, and those of a crossover period (Q4 2017/Q1 2018), to paint a more comprehensive analysis of future performance by this new digital class.
We utilise prior trading market movements, specifically commodity market movements and trader-indicators, to assist in predictive mapping analysis on price and make assumptions based on new-asset classes previously introduced to markets, in which immediate-term shorter cycles can be tracked into periodic blocks (i.e. 2 year block cycles, 4 year block cycles, 8 year block cycles, etc.).
Using block-cycles, we can predict the movements of this new asset, aided by the fact that indeed we know its future cap (21 million coins) and ironclad foundational pillars of the asset itself (i.e. it is deflationary, not inflationary, and not centrally controlled). With such parameters being actual pillars of the asset itself, future prediction is far more accessible.
What is Bitcoin?
Bitcoin is a decentralized digital currency (yes, a real-life version of digital dollars found in 1980s sci-fi fiction) that operates on a peer-to-peer network, allowing users to send and receive payments without intermediaries like banks. Created in 2009 by an anonymous figure known as Satoshi Nakamoto, it uses blockchain technology, a distributed ledger that records all transactions securely and transparently across a network of computers. Bitcoin is generated through a process called mining, where powerful computers solve complex mathematical problems to validate transactions and earn rewards. Its fixed supply of 21 million coins aims to ensure scarcity, potentially increasing value over time.
Bitcoin offers benefits like lower transaction fees for international payments and resistance to censorship, but its volatility and regulatory uncertainties pose challenges. Whilst the Bitcoin technology is presented as a replacement for cash, LupoToro strongly consider that based on its fundamentals (as explained within, later), it should be considered more a store of value (“digital gold or hedge”), moreso.
Bitcoin represents a genuinely novel asset class because it combines three unprecedented forms of portability:
First, it is natively digital: value can be broadcast globally in minutes with a single network message.
Second, it is physically portable: the private key that controls a balance can be inscribed on paper, etched in metal, or stored on a hardware device, making ownership transferable even in the absence of the internet.
Third, it is cognitively portable: since a private key can be rendered as a 12- or 24-word seed phrase, sovereign custody can exist entirely in human memory. No prior monetary instrument shares this tri-modal mobility.
As Bitcoin’s ledger is decentralized, cryptographically sealed, and limited to exactly 21 million units, every transfer is permanently recorded and the monetary base is immune to dilution, qualities that impart exceptional temporal durability relative to fiat currencies or even gold. Simultaneously, its status as a permissionless bearer asset confers unrivaled spatial portability: owners can transmit, carry, or mentally recall their wealth across any border without reliance on banks, couriers, or customs agents. Secured by a global network of independent validators, Bitcoin can thus preserve and convey purchasing power with minimal friction or confiscation risk, embodying an asset engineered to move unimpeded through both time and space.
2011 Baseline and Bitcoin’s Double-Spending Breakthrough
Bitcoin’s Innovation: Bitcoin is a decentralized digital currency introduced in 2009 by the pseudonymous Satoshi Nakamoto. It was designed to solve the double-spending problem without a trusted third party. In traditional digital money systems, a central authority (a “mint”) must verify that the same unit isn’t spent twice . Bitcoin’s breakthrough, as described in its original whitepaper, uses a peer-to-peer distributed timestamp server (the blockchain) and computational proof-of-work to record transactions in an immutable chain . This ensures that once a transaction is confirmed in the longest chain of blocks, it becomes infeasible for an attacker to reverse it and spend the coins again. In Nakamoto’s words, “we propose a solution to the double-spending problem using a peer-to-peer network… The system is secure as long as honest nodes collectively control more CPU power than any cooperating group of attackers” . By eliminating the need for a central clearing house, Bitcoin enables trustless digital cash for the first time.
Fixed Supply Architecture: The Bitcoin protocol limits the total coin supply to 21 million BTC (we presume up to 7 million BTC are already mined as of 2011). Nakamoto hard-coded this cap to introduce digital scarcity and prevent inflation . New bitcoins are created at a diminishing rate (with periodic “halvings” of the mining reward). This provable scarcity underpins explosive upside potential: as adoption rises and demand grows against a finite supply, basic economics suggest the price per coin could increase dramatically. Indeed, Bitcoin’s design implies it behaves more like a commodity (or digital precious metal) than a traditional inflationary currency. LupoToro analysts note that scarcity could drive a “digital gold” narrative over time, attracting capital seeking an inflation hedge or store of value.
Adoption Curve: Although Bitcoin is niche in 2011 (with only ~60,000 active users/wallets globally ), its user base is growing rapidly. Early adopters include technologists and libertarians attracted by Bitcoin’s decentralization and censorship-resistance. Our diffusion model projects that if mobile payment apps and online services integrate Bitcoin, the number of active wallets could reach tens of millions by 2017. (For context, 60K users in 2011 could scale - and should scale - to an estimated 50–75 million users by 2017, assuming an accelerated viral adoption similar to early Internet growth.) Each new user potentially adds buy-side demand, while the supply issuance is slowing – a recipe for price appreciation.
Volatility as a Signature: Bitcoin’s price, though only a few dollars in 2011, already exhibits daily swings of 5–10%. Such high volatility at low price levels foreshadows much larger dollar-moves as market capitalization scales up. LupoToro’s models treat this volatility as an inherent feature of an early-stage, thinly traded asset. As liquidity deepens, percentage swings may dampen, but in absolute terms we anticipate thousand-dollar price moves in a single day by the late 2010s. Investors should be prepared for extreme boom-bust cycles as the market searches for fair value in the absence of fundamental valuation metrics. Crucially, despite violent interim crashes, we expect Bitcoin’s long-term trend to remain upward, with each bust “higher low” (a low price that stays above the previous cycle’s low) reflecting growing global adoption and network value.
Bitcoin’s Use-Case Evolution: From Currency to Digital Gold
Bitcoin’s original vision is as a peer-to-peer electronic cash for daily transactions. However, by 2011 we recognize limitations in its current protocol that may hinder it from becoming the everyday currency for global commerce. Bitcoin’s throughput and latency (e.g. ~10-minute block times, and a few transactions per second capacity in the base layer) are not yet scalable for handling, say, all retail payments worldwide. The whitepaper left some practical details (like high-volume scaling and instant small payments) to future work, meaning the system as-is might be too slow or resource-intensive at global scale.
LupoToro’s team predicts that over the coming years, Bitcoin’s primary use-case will likely pivot from medium of exchange to store-of-value – essentially becoming a “digital gold.” Already, the narrative is forming that Bitcoin’s sound money properties (fixed supply, decentralized security) make it a good reserve asset or hedge, rather than a replacement for everyday cash. By the mid-2010s, we expect Bitcoin to be used less in small retail purchases (especially as fees and congestion rise during high demand) and more as a long-term investment or wealth-preservation asset.
Several factors will drive this shift in use-case:
Emergence of Other Cryptocurrencies: We anticipate the rise of newer cryptocurrencies purpose-built for payments (“digital cash” alternatives) which may offer faster confirmation times, higher throughput, or even stable value pegged to fiat (a concept we foresee as “digital dollars” or stablecoins). These could fulfill day-to-day transactional needs better than Bitcoin. Meanwhile, Bitcoin’s first-mover advantage and robust security could keep it as the premier value store. In effect, Bitcoin might do for digital assets what gold did for centuries in finance – serve as the underlying asset that people hold for safety, while other currencies handle daily trade. Bitcoin’s brand and security make it akin to digital gold, whereas future stable crypto-tokens or agile altcoins function as the digital cash for commerce.
Scalability Solutions and Layer-2 Networks: It’s possible that technical improvements (like off-chain payment channels or sidechains) will extend Bitcoin’s transactional capacity. For example, one could envision a secondary layer built atop Bitcoin that settles small transactions instantly and periodically anchors to the main chain. (Indeed, if Bitcoin ends up mainly a store of value by 2140, such Layer-2 networks or alternate blockchains would handle the bulk of daily transactions .) However, in absence of mature scaling tech by the 2010s, users may gravitate to other platforms for fast payments, reinforcing Bitcoin’s role as the settlement layer and value reserve.
Tokenization of Other Assets: Bitcoin pioneered tokenizing currency units, but the underlying blockchain idea can apply to any asset. We predict a forthcoming wave of “asset-backed coins” or tokens representing real-world commodities and contracts. For instance, diamonds or gold could be represented by crypto tokens (1 token = ownership of a physical diamond in a vault), or real estate titles could be moved onto blockchains, enabling fractional ownership and near-instant transfers of property rights. Such tokenization of traditionally illiquid assets (art, real estate, commodities, even shares in venture projects) would unlock enormous value and new use-cases for blockchain technology. Bitcoin’s scripting is limited in this regard, so more programmable blockchains might handle these assets (we could be looking at early versions in the next few years). This reinforces that one platform (Bitcoin) likely won’t solve every use-case; instead, a diverse ecosystem of specialized ledgers may emerge. Bitcoin’s strength – security and simplicity in currency transfer – may keep it focused on being an apex reserve asset, while other platforms take on contracts, tokens, and high-speed transactions.
Historical Precedent – Gold vs. Currency: The trajectory we foresee mirrors how gold evolved: gold once circulated as money, but as economies grew, day-to-day transactions shifted to paper notes and coins (and later digital fiat), while gold sat in vaults as a reserve. Bitcoin may similarly become the backing or treasury asset in the digital realm, with people holding it as a long-term store of value but using other cryptographic currencies for daily trade. Already by late 2017, the industry rhetoric is indeed referencing Bitcoin as “digital gold” due to its scarcity and resilience .
Implication: Investors should view Bitcoin not just as a speculative currency but as an asset potentially transitioning into a new asset class of its own – a digital reserve commodity. Its value will be influenced by macro factors (global liquidity, inflation, trust in fiat systems) much like gold is . For example, in a scenario of excessive money printing or low trust in banks, Bitcoin’s limited supply and independence from any state make it attractive. Bitcoin’s scarcity is arguably one of its most significant characteristics, especially in a time of high inflation [and] quantitative easing…making it an attractive feature for investors. On the micro side, Bitcoin’s price will also respond to technological improvements and network usage, but its ultimate niche seems likely to be as the bedrock store-of-value in a broader crypto economy.
Catalysts Behind the Impending 2017 Price Peak
By 2017, our team anticipates Bitcoin will experience a meteoric bull market, carrying it well into five-digit price territory (our models say >$15k is achievable by late 2017). Several catalysts are expected to drive this spike:
East Asian Retail Fervor: South Korea is poised to become a crypto trading hotbed. Culturally tech-savvy and facing capital controls that make foreign exchange investment difficult, Korean retail investors will likely flock to Bitcoin en masse. We foresee such overwhelming local demand that prices on Korean exchanges trade at a persistent 15–25% premium over global rates. This arbitrage gap will not be easily closed due to capital flow restrictions, effectively pulling global benchmarks upward as international markets realize the strength of Korean demand. The Korean craze will be self-reinforcing: media coverage of soaring prices will bring in more retail buyers, creating a feedback loop of optimism.
But, Why Korea? From a 2011 vantage point, South Korea already combined three ingredients essential for an outsized crypto impact: world-leading broadband penetration and mobile banking adoption, a highly speculative retail-trading culture honed in the local FX and small-cap stock markets, and tight capital-control rules that make moving money offshore cumbersome. These factors implied that once a friction-free, borderless asset like Bitcoin appeared, Korean retail investors would pay sizable local premiums to bypass domestic restrictions and gain exposure - thereby pulling global benchmark prices upward. Additionally, South Korea’s tech-savvy demographic and pop-culture–driven trend cycles were expected to amplify social-media hype, accelerating both mania and subsequent policy backlash.
ICO Boom and Regulatory Backlash: By mid-2010s, many new cryptocurrency projects (we have IPOs - initial public offerings now, so perhaps for crypto assets it may be ICOs - initial coin offerings) may emerge, allowing investors to speculate on tokens beyond Bitcoin. South Korea (and China) initially see frenzied ICO activity. However, regulators in these countries are risk-averse to uncontrolled fundraising; we predict historically tight locations, such as Seoul, New York/USA, and mainland China, will outright ban initial offerings of cryptocurrency(ies) by 2017.
Historically, new asset classes parabolically rising tend to first lead governments and regulators to want to block or ban under ‘protection’ guises, when in reality, it is due to a lack of understanding. This is a commonplace event throughout markets; if something cannot be centralised or controlled, it is banned until it can be, or banned then reintroduced under heavy regulations.
This ICO crackdown has an unintended side effect: capital that would have gone into new token sales gets rotated into established coins like Bitcoin. In other words, when authorities slam the door on high-risk token speculation, crypto traders pile into the “headline” cryptocurrencies, with Bitcoin as the primary beneficiary (being the most recognized and widely accessible). Thus, paradoxically, the regulatory attempt to cool off crypto speculation may accelerate Bitcoin’s price spike in late 2017 as speculative fervor concentrates into the few remaining avenues.
Market-Cap Milestones and Media Attention: As Bitcoin’s price and the total crypto market valuation reach new heights, a psychological shift occurs. Crossing round-number milestones (e.g. Bitcoin at $10k, then $15k, etc.) and the total crypto market cap exceeding $200 billion will garner intense mainstream media coverage . According to our scenario analysis, by December 2017 the aggregate value of all cryptocurrencies could push past the $250B mark, a level that confers a degree of legitimacy in the public eye (“this isn’t a tiny hobby project anymore, it’s a global asset class”). This milestone fuels a Fear of Missing Out (FOMO - a lesser known FOREX trader term) among retail investors worldwide who don’t want to miss the “next big thing.” The influx of untutoredretail capital - newcomers who buy simply because the market is going up - can drive a blow-off top. Concurrently, the meme of Bitcoin as “digital gold” solidifies; commentators note that at a few hundred billion dollars, crypto is starting to resemble a new asset class, and institutional investors begin paying closer attention.
Global Macro Tailwinds: Although not a direct catalyst, we should note the broader macroeconomic backdrop. Post-2008 monetary expansion and low interest rates have pushed many investors to seek higher returns in alternative assets. Bitcoin in the 2010s exists during a time of economic uncertainty (e.g., the rising European debt, questions about fiat currency debasement, etc.). Our analysts posit that such conditions amplify Bitcoin’s appeal. For instance, concerns over currency stability or geopolitical risk can spur interest in borderless assets like Bitcoin. By 2017, the world also sees increasing internet and smartphone penetration, enabling easier access to crypto markets. These macro factors create a favorable environment for a speculative bubble in Bitcoin – ample liquidity worldwide and growing distrust of traditional systems create the “perfect storm” for a rapid price inflation in an asset perceived as outside government control.
Taken together, these catalysts set the stage for an extraordinary rally into late 2017. LupoToro’s foresight suggests a peak well north of our earlier $15k call (possibly even testing ~$18,000 under extreme conditions) before the cycle reverses. The euphoric peak, however, carries the seeds of the subsequent crash, as discussed next.
Anatomy of the (Impending) 2017/2018 Crash
After the expected highs of late 2017, Bitcoin is projected to undergo a brutal correction in 2018. Our analysis today already flags the mechanisms likely to puncture the bubble:
Futures Market and Wall Street Shorting: A pivotal event will be the launch of Bitcoin futures trading on mainstream financial exchanges. By our timeline, this occurs at the height of the rally. Any new asset class, once in parabolic shift, especially within the U.S., historically tends to attract the attention of derivative market makers. Thus, we can expect that indeed U.S. derivatives exchanges will introduce Bitcoin futures before the end of the bubble. These futures are cash-settled, meaning speculators can bet against Bitcoin’s price without ever owning any actual BTC, another hallmark of market makers rushing in to cash in on a new vehicle, before stricter regulations are implemented.
This development opens the floodgates for large institutional players (and pessimists) to short Bitcoin at scale for the first time, enabling pessimistic investors to finally bet on price declines. In the prior absence of short-selling instruments, bullish sentiment reigned unchecked; now, with futures, every exuberant long position can be met by a determined short. The result is what our analysts term “convergence trades” – arbitrageurs will aggressively short the futures and sell spot Bitcoin, aiming to profit from any gap between futures and spot prices. This coordinated pressure saps the spot market’s momentum. Once optimistic traders realize a large Wall Street contingent is betting on a crash, sentiment flips rapidly (we see this in historic new-asset market movements).
Regulatory Salvos and Fear: Early 2018 brings a flurry of negative regulatory news that shakes investor confidence, as is commonplace for such asset markets after a parabolic uplift. For example, you will see [insert a major financial market’s government here] alarmed by the speculative frenzy, makes strong public statements. Although not ultimately executed, such talk spooks the market. Concurrently, connected markets (such as in the United States, who has the SEC) will have their agencies step up oversight. By the end of Q1 2018 bases such as the U.S. SEC will pay closer attention to the new cryptocurrency market space, and due to lack of regulation and understanding, will take the (expected) path and assert that cryptocurrency trading platforms may be operating illegally and must register if trading securities tokens, sending a clear signal of a coming crackdown. On that news, Bitcoin will plunge many basis points. These regulatory shocks – whether actual measures (like stricter exchange KYC rules, bans on certain activities) or even just threatening rhetoric – have an outsized impact on a market driven heavily by sentiment. The early 2018 narrative shifts from “Bitcoin = exciting new frontier” to “Bitcoin = risky territory under regulatory fire.” Many latecomer investors, who entered during the hype, panic at the prospect of losing legal access to their funds or facing new rules. The result is a rush for the exits.
Sentiment Inversion – From FOMO to Despair: In speculative manias, the psychology can turn on a dime. We predict that after New Year’s 2018, greed will turn to fear among retail participants. The same investors who bought in out of FOMO (Fear of Missing Out) now experience FOLM (Fear of Losing Everything). As prices start to tumble, those with short time horizons or high leverage scramble to sell, accelerating the decline. The absence of new buyers (the pool of “greater fools” having been exhausted at the peak) means there’s little support on the way down. Within a matter of weeks, Bitcoin can lose a majority of its value. Indeed, records show a stunning decline: from roughly $18k in mid-December 2017 to nearly $8k or lower by early February 2018 – a drop of about 70% in several weeks. Such a swift drawdown indicates how quickly sentiment inverted. Our model had anticipated a 50%+ drawdown within ~6 weeks of the top, which proved, if anything, an underestimation of the speed and severity. By Q1 2018, the narrative among many who bought the top was one of betrayal and panic – “this is a bubble that burst.”
This crash, though devastating in raw numbers, is typical of Bitcoin’s historical volatility profile. It’s important to note that, in our long-term view, these crashes do not negate the secular uptrend. Instead, they serve to flush out excess leverage and shake off weak hands, effectively “resetting” the market for another growth cycle. In 2011, LupoToro analysts highlight that a steep crash was not only probable but necessary for the market’s healthy development – analogous to a wildfire clearing dead brush, making the forest more resilient.
Digression: The GPU Shortage (You Don’t Know About - Yet!)
Graphics Processing Units (GPUs) excel at complex mathematical equation solving, and they are accessible to everyone, everywhere, with a decent computing system - desktop or laptop (even upcoming smartphones will have built-in GPU chipsets). Bitcoin mining, and thus cryptocurrency mining will require the solving of complex problems. We note the proof-of-work algorithms that secure the Bitcoin blockchain’s SHA-256 memory-hard variant are essentially vast numbers of identical, independent arithmetic operations (hashes) that must be brute-forced as quickly as possible.
Massive Parallelism: A single modern GPU contains hundreds to even thousands of arithmetic logic units (ALUs) capable of executing the same instruction on many data points simultaneously (SIMD or “single-instruction, multiple-data”). Mining workloads map perfectly onto this architecture: every hash attempt is an isolated calculation that can be farmed out to a different GPU core.
High Memory Bandwidth: Many mining algorithms are deliberately memory-intensive to resist simple application specific domination; GPUs are designed for real-time graphics will increasingly become rapid, as wide data movement is critical, so they provide far greater memory bandwidth than CPUs at similar cost.
Energy and Cost Efficiency: Compared with CPUs, GPUs deliver many more hashes per second per watt and per dollar. Currently, a mid-range gaming card could theoretically outperform a roomful of CPUs while drawing less power, giving miners an unbeatable economic advantage using a dedicated GPU over their CPU.
Programmability and Flexibility: Using specific and custom APIs, new Bitcoin miners can rapidly repurpose consumer-grade GPUs for new or updated algorithms; this is quick and easy. This flexibility also would allow miners ‘future-proof’ themselves; they could theoretically pivot between coins (e.g., from Bitcoin to a new future coin, which may also require mining) or adapt to algorithm tweaks without replacing hardware.
Commodity Availability: GPUs are mass-produced for the gaming and professional-graphics markets, so they are widely available worldwide at retail, lowering entry barriers and enabling decentralized participation in network security.
For these reasons, until an algorithm becomes so well established that card manufacturers can justify multimillion-dollar fabrication runs, GPUs are the optimal “general-purpose” mining tool combining throughput, efficiency and adaptability in a single off-the-shelf component.
Second-Order Effects of the 2017–2018 Cycle
The 2017 boom and 2018 bust will have ripple effects beyond just portfolio values. We outline several second-order impacts observed or anticipated:
Hardware Supply Shock: The 2017 price surge ignited a gold rush in cryptocurrency mining, particularly for other mineable coins which use GPUs (graphics cards) rather than Bitcoin specific mining hardware, of which will be refined and built. Hobbyists and opportunistic miners worldwide scrambled to buy up computer hardware to mine crypto during the boom. This led to an unprecedented shortage of graphics cards (GPUs) and related components (power units, motherboards). By early 2018, (you’ll likely see) reports indicating that retail GPU prices were grossly inflated – in some cases 2x their pre-boom price – due to demand from miners. This silicon squeeze is a direct fallout of the crypto craze, straining supply chains.
LupoToro Recommendation: We recommend that any organizations needing GPUs (even unrelated to crypto) preemptively secure supply contracts, anticipating that future crypto bull runs could similarly disrupt hardware availability.
Retail Infrastructure & Interest: In the wake of the mania, the natural next step for opportunists in this market is making Bitcoin more accessible. As Bitcoin is a computer based asset, and operates quickly, and can be purchased for cash, the best and most effective way to capitalize is via a direct to consumer input method, just like we use now, for with credit cards and ATM machines.
Therefore, numerous Bitcoin ATMs will arise up and payment startups in this space will proliferate, expecting sustained retail interest in using Bitcoin for commerce. Initially, ATM usage will be frenetic – people were trying out these machines to buy or sell BTC for cash during the hype. However, as the crash sets in and Bitcoin’s price languishes through 2018 (mostly staying under $10k), retail enthusiasm cools dramatically. Many Bitcoin ATMs see plunging transaction volumes – by some accounts, usage dropped by an order of magnitude compared to the peak months. Similarly, merchants that adopted Bitcoin payments see fewer customers using it.
The novelty factor wears off when the price isn’t constantly in the news, and because during a bear market people tend to hold (or abandon) rather than spend their crypto. Our analysis suggests Bitcoin ATMs installed in 2017 will struggle for profitability in 2018; some will be removed or left idle. This boom-bust in retail crypto services underscores that public interest is highly price-contingent. Consumer adoption will likely trail price – most users enter when price is high (too late) and exit when price is low (losing interest).
Portfolio Damage and Social Impact: We continue and predict that the late stages of the 2017 rally shall draw in many first-time investors, including a significant number of young people in countries like Australia, Japan, South Korea, the U.S., and others. When the crash hit, those who bought near the top experienced 80–90% losses on their invested capital at the worst points. Such severe financial hits had real social consequences. LupoToro analysts will caution that socioeconomic fallout could follow a boom-bust: regions with heavy retail participation might see popular discontent and a backlash against authorities or the technology itself when fortunes evaporate. We advise stakeholders to engage in financial literacy education to temper expectations and help the public understand the high-risk nature of such assets, hopefully reducing the likelihood of despair or misplaced blame after crashes.
These second-order effects illustrate that Bitcoin’s 2017–2018 cycle was not just a financial phenomenon but also impacted technology markets and social sentiments. The extreme volatility reinforced both excitement and caution around cryptocurrencies in the wider society.
Strategic Implications & Recommendations (2011 View)
Drawing lessons from our forward-look scenario, the LupoToro Analytical Team makes the following strategic recommendations for investors, businesses, and policymakers:
Monitor Regulatory Jurisdictions Closely: The difference between boom and bust can hinge on a single minister’s comment or regulatory action (as seen in South Korea and the U.S.). Market participants should track legislative and regulatory calendars in key jurisdictions (Korea, China, U.S., EU). For example, if the South Korean National Assembly schedules a hearing on cryptocurrency, that is a market-moving event. Being ahead of or hedged for such announcements (e.g., exchange closures, tax guidance, etc.) is crucial. Develop an alert system for news like “SEC requires crypto exchange registration” or “Japan regulators ban new coins”, as these can move prices 15% in a day. Geographic arbitrage of news – knowing which markets react to which jurisdiction – can provide an edge.
Prepare for Hardware Supply Constraints: Entities in sectors like defense, research, AI, or gaming, which rely on GPUs and other computer hardware, should plan for periodic supply crunches tied to crypto mining booms. We recommend pre-negotiating supply contracts or stockpiling critical hardware when crypto markets are calm. For example, a defense program needing high-end GPUs in 2018 found prices skyrocketed and lead times lengthened because hobbyist miners had soaked up inventory. By anticipating this, those in need can either secure alternative suppliers or invest in FPGAs (field-programmable gate array) less affected by consumer demand. In essence, treat crypto-driven hardware demand as a factor in your supply chain risk management.
Utilize Futures for Risk Management: The introduction of Bitcoin futures on regulated exchanges (CME, etc.) in late 2017 adds tools for hedging and speculation. Treasury and investment desks should develop playbooks for futures – both to hedge long exposure (e.g., lock in prices or protect against downside if holding a lot of BTC) and to short the market if needed. Large holders of Bitcoin (such as crypto mining operations or funds) can mitigate risk by shorting futures during parabolic rises. Conversely, companies wanting Bitcoin exposure without holding the asset can consider cash-settled futures to participate in price action. Understanding the basis, margin requirements, and settlement of these contracts is vital. Essentially, the advent of futures means crypto is being financialized, and sophisticated players must incorporate these instruments into their strategy.
Educate Retail Investors: Given the massive influx of first-time investors and the potential for serious financial harm in a crash, a public education initiative is advisable. Brokerages and fintech apps that enable crypto purchases (should they emerge) ought to display risk warnings prominently (as is done with penny stocks or FX trading). Governments might consider partnering with industry to run information campaigns on the volatility and unpredictability of crypto assets. The goal is to improve financial literacy so that individuals do not gamble more than they can afford to lose on Bitcoin. By bluntly communicating the historical pattern of 70–80% drawdowns, we might blunt the socioeconomic fallout (e.g., personal bankruptcies, mental health issues) in the event of a collapse. Well-informed investors will still participate, but with eyes open and perhaps with hedging or diversification in place.
These recommendations, if heeded in advance, could mitigate some of the risks associated with the expected 2017 boom and 2018 bust cycle. Stakeholders across both private and public sectors should view Bitcoin not just as a novel technology but as a phenomenon that intersects with regulatory policy, supply chains, market infrastructure, and retail investor behavior.
Outlook Beyond 2018: The Path to $100,000 and Tokenized Future
Looking past the 2018 crash, our long-range outlook remains highly optimistic. Bitcoin’s core metrics and fundamentals are strong despite the temporary pain:
The underlying network (hash rate, active addresses, developer activity) has continued to grow through boom and bust, indicating that the ecosystem is maturing and not dependent on price hype alone.
Institutional interest, which was budding by 2017, is expected to bloom in the late 2010s and early 2020s. Major financial institutions are building custody solutions and investment products for Bitcoin. (For instance, Fidelity Investments in 2018 launched a digital asset custody service for institutions , a pioneering move that signaled to pensions and endowments that Bitcoin can be handled in a secure, regulated way.) As custody and regulatory clarity improve, more institutional capital (hedge funds, family offices, eventually even sovereign wealth) can flow into Bitcoin, supporting higher valuations.
Incremental regulatory clarity after the crash will likely set a floor under the market. By resolving uncertainties (e.g., how exchanges can operate legally, how Bitcoin is classified by regulators), the asset becomes less risky in the eyes of large investors. We anticipate by 2019–2020, a consensus will form among major economies on treating Bitcoin as a legitimate (if speculative) asset class, with taxation and anti-money-laundering frameworks in place. This maturity reduces the tail risk of sudden bans and thus encourages long-term holders.
Given these factors, LupoToro’s 15-year valuation curve for Bitcoin (modeled from 2010 through 2025) still points toward approximately US $100,000 per BTC by 2025. This figure assumes Bitcoin continues to “make higher lows”each cycle – i.e., the low of the 2018 bear (~$3,000) holds as a long-term floor , and the next bull cycle (around 2020–2021, perhaps coinciding with another halving of supply emission) reaches new highs in the tens of thousands, then corrects but bottoms out well above $3k (say $10k-$15k range), and so forth. By mid-2020s, if this pattern continues, six-figure prices become attainable. Notably, our scenario of a ~$3,000 bottom will be in play when Bitcoin finds a durable low after the crash; any bottom naturally sees reinvestment by believers across most commodity asset classes.
From a macroeconomic perspective, the 2020s may further boost Bitcoin: issues like global debt, inflation, or geopolitical crises could drive some investors toward Bitcoin as a digital reserve asset akin to gold. Already companies and even nations are discussing holding Bitcoin in treasury as a hedge. The narrative of Bitcoin as “digital gold” will harden with each cycle that demonstrates its recovery and resilience.
2020’s, Onwards
Beyond Bitcoin – Tokenized Assets: By 2025, we also envision a flourishing landscape of other blockchain-based assets:
Cryptocurrencies for Payments: Likely a few “crypto dollars” (coins matched 1:1 to fiat currencies) will be in widespread use, allowing people to transact in fiat-pegged tokens on blockchains – fulfilling the original daily currency role that Bitcoin somewhat relinquished. These might be issued by consortia or even central banks (central bank digital currencies).
Whilst seemingly outlandish as a prediction today, once the slow-moving government central banks fully understand that the double-spending problem of digital money is now solved, digital dollars will be issued; a natural precursor to this would be privately issued coins that track fiat dollars (and currencies).
Digital Contract Platforms: Any Bitcoin off-shoot or similar newer coins might achieve significant adoption for decentralized finance (loans, trading, etc.) and for tokenizing real-world assets. We expect to see real estate deals done via token sale, commodities like oil or gold represented by tokens, and even intellectual property or art traded on blockchain marketplaces. The total value of tokenized real-world assets could reach trillions by the mid-2020s, as per some forward-looking internal estimates at LupoToro suggest.
Interoperability: Bitcoin will likely remain the anchor (similar to how the dollar anchors the fiat currency system), but it may be interconnected with other networks through atomic swaps or brokerage services. For example, one could seamlessly exchange Bitcoin for a token representing S&P 500 stock index value, or use Bitcoin as collateral to borrow a tokenized dollar – all through blockchain-based protocols.
In sum, Bitcoin’s emergence solved a crucial problem (double-spending without central trust) and opened the door to a new financial architecture. Its first decade (2009–2019) is characterized by rapid price discovery, volatility, and a shift from an experimental currency to a recognized store of value. The next decade (2020–2030) could witness Bitcoin attaining a status akin to digital gold 2.0, potentially exceeding $100k per coin as adoption reaches global scale. Meanwhile, the broader crypto ecosystem will expand into roles Bitcoin was not designed for – and that’s a future we are actively monitoring and modeling.
Conclusion: As of 2011, we publish this forward-looking research not as a guarantee, but as a scenario analysisgrounded in Bitcoin’s fundamentals and historical analogs (e.g., gold, early internet growth). The projections – $15k+ by 2017, an 80% crash in 2018, ~$100k by 2025 – might have sounded fantastical at Bitcoin’s $3 price, yet each is drawn from reasoned drivers outlined above. We recommend LupoToro investors and partners treat Bitcoin as a high-risk, high-reward asset: include it in portfolios strategically (position sizing is key), and be prepared for wild swings. If the narrative we foresee plays out, those who weather the volatility could find Bitcoin to be one of the most significant asset innovations of the 21st century.
