ELI5 – Why do so many people think it’s going to the moon?

Genuine question from a newbie who bought in recently at the high point. So many people are predicting it will go to $100K, 1 million, etc.

What is the rationale behind those predictions? I know there’s limited supply, but won’t there be several other alternatives in the coming years? From the posts on here I’m reading several other countries are discussing creating their own coins. Therefore would that not take away from Bitcoin itself? Eg a coin backed by the government would probably get a lot more people to adopt and trust it.

People also say “money printer go brrrrr” and maybe so, but my fiat currency can still be used to purchase anything, anywhere and hasn’t lost 30% of its value from last month.

That’s why I’m having trouble wrapping my head around why people are predicting it will go to such heights?

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  1. Yes your fiat currency may have not lost value by 30% within the last month, instead the USD has lost 96% of its value since 1913. Fiat currency may not have the volatility of crypto assets but it does suffer from the longer silent killer of inflation. Simply put, those who may not necessarily fully grasp economics would say “remember back in the day when so so would cost this much”, yup well that’s inflation. Your currency gets devalued overtime as the supply increases, even more so with the US continuously increasing the money supply more than in the last year than anytime ever in the existence of the dollar.

    Bitcoin is a deflationary asset with a known limited supply of 21 million. The reason the fiat value is estimated so high for BTC is down to supply and demand. Overtime as the supply continues to drop, and if demand is high, then the price will follow suit as people are willing to pay more to obtain that asset. Now the question of whether there’s other projects, of course there’s 10s of thousands, but the key point is bitcoin was the first and has been tested continuously with negativity and has still stood the test of time.

    If you bought Bitcoin when it was at $1 you would now be sitting on asset with $30k. If you had $10,000 sat in a low interest bank account, over that same time period you will have lost purchasing power due to inflation. That’s the power of a deflationary asset, and is why investors flock to assets like gold in times of high inflation to hedge against it.

    The reason Bitcoin is also valuable beyond just being deflationary, is the technology. A blockchain technology that allows integrity and transparency in a financial system, where the middle men (traditional banks) are not needed. Where individuals have the power to take financial independence through peer to peer transactions. If you understand fractional reserve banking, you’ll understand the absolute necessity of blockchain technology. Unfortunately, that transparency goes against the criteria of what the government needs to maintain its control, the CBDCs will utilise the blockchain technology with all the perks beyond the transparency, they’ll be a closed off centralised blockchain. Therefore, alternatives such as defi and Bitcoin won’t be replaced because there’s a purpose for them and as long as people see value in them, that won’t change.

    Hope that’s a clear enough explanation of my opinion.

  2. People are just betting that demand will continue to go up faster than supply.

  3. You’ve got some good responses. I’ll add this:

    The world is going to see more and more instability in the coming years. Look at the map of vaccinations and the spread of variants. Look at the US West Coast and Siberia burning down. Look at the flooding in China and Germany. Even if you don’t believe the US will collapse ever, you have to see the potential for countries all over the world to experience massive upheaval. Bitcoin is a safe haven asset for everyone in those countries.

  4. Bitcoin is a newly recognised commodity that isn’t blocked by trading sanctions, controlled by paper escrow or controlled by large centralised systems.

    Well, at least it’s not supposed to be 🤣

    [You probably seen this chart hundreds of times](
    Personally, I feel that Bitcoin follows the chart religiously, just look at how euphoric the sub gets when it’s breaking highs and how people are screaming HODL when it’s dropping (complacency stage).

    Right now we are seeing many post or comments saying doomsday is coming or that BTC is over, buy another shitcoin instead, so I am guessing we are at the disbelief stage again. I don’t know about you but I am loading the f up

  5. Thanks everyone for the replies, and not eviscerating this noob for the simple questions. Will do some reading up before I start to DCA money that I do care about, and get more serious about it!

  6. Long term trend is 200% on average gains per year including the volatility. Interest and adoption is increasing (demand) and the supply is dwindling both through hodlers and the 4 year halving event.

    Just game theory.

  7. Chartists reading the graphs like it’s the prophecy of the bible… it spikes in price usually at the second half of the year, usually quadrupled in price, so prophets be calling for the rapture.

    No one can guess what will happen in the market without insider info!

    My advice is to trust in no one and hodl as much as you can until retirement or pass it to your next in kin!

  8. No. Central bank coins will not devalue bitcoin because they will still be fiat. Bitcoin is not fiat.

    If you live in a country where your fiat is stable, then no, you won’t see 30% price fluctuations in a year. Consider yourself lucky. This year, expect >5% in U.S.

    Normally, inflation takes 5-10 years to devalue your money by 30%, so it’s just a slow boil towards worthlessness. Now it’ll just be 3-5 years or less. Perfectly acceptable. Nothing to see here.

  9. If you understand Bitcoin you know it is priceless. Money that can’t be controlled by a central authority itself is a great thing. Then think about all other aspects of fixed supply, global borderless currency, Lightning etc

  10. “won’t there be several other alternatives in the coming years?”

    This question makes sense for **products**. VHS tapes are products, and they were quickly replaced by DVDs, which were replaced by streaming.

    But bitcoin isn’t a product, it’s a **network**. And networks don’t behave like this. Imagine when you first joined Facebook if your friend was like “yo screw facebook, I made my own social network that’s a little bit better in a couple ways, come join!” And then you go join and it’s just you and him. Not much of a network, is it? Google+ and Path are two networks that found this out the hard way. Once a network has critical mass it’s really, really unlikely for it to be stopped / replaced.

  11. The inflation argument should be secondary, but most people don’t dig deep enough to get it. It’s going to the moon because it’s better technology. So the value goes up as a multiple of the network. PLUS, it has a built-in inflation hedge. Think Netflix + gold. Just a matter of how fast, and there is a lot of bullshit going on in the world making the line go in anything but a straight line.

  12. With many different coins I your wallet you can chose what coin to use on any given transaction. That alone will hedge against inflation . Make purchases with the coin that is up on any given day. This will be the new fight against inflation.

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