According to the San Francisco Federal Reserve Bank when discussing the volatility of Bitcoin’s price and its impact regarding how the digital currency should be classified, whether as security, money, or commodity, Bitcoin price has a possible value of 1,800 USD. Joost Van Der Burgt, fintech policy adviser at San Francisco’s Federal Reserve Bank said Bitcoin straddles the features of all of the assets mentioned here. However, he makes interesting points regarding the elements that make BTC fit particularly into one category instead of all three.
Burgt also shows evidence that Bitcoin’s price is in a bubble, but not firmly saying whether it is.
Analysing Bitcoin Price
Though Bitcoin’s price volatility would be the apparent reason why it struggles as a real currency, Burgt looks further at how it is used in the market side by side with central banking structures. He concluded that Bitcoin isn’t traded for goods very much. In addition to the increasingly unfavourable regulations globally, he believes that the digital token lacks a corresponding value, which is a primary part of exchange today.
Bitcoin fairs better as a security in the current framework. Securities are purchases of stakes in a company or debt. Bitcoin does not fit either category since it doesn’t generate interest, capital gains or dividends. As a commodity Bitcoin behaves like entrenched commodities such as gold and oil, according to Burgt. He argues that Bitcoin has no intrinsic value, but mining is the keyway of placing more value on this asset that approximates to 1,800 USD per coin.
The 1,800 USD theoretical value is lower than Bitcoin’s price currently. Burgt brings the bubble fear home looking at the stages of BTC’s FOMO and euphoria cycles that shape previous market bubbles (like the 2007 financial crisis). Burgt, in a unique development, calls John McAfee’s 1 million USD Bitcoin price target a counterpoint.