So far 2018 has been a year to forget for the Bitcoin (BTC) price.
After almost hitting US$20,000 at the start of the year, the world’s largest cryptocurrency has fallen a massive 68% to US$6,367.43.
This means Bitcoin’s market capitalisation now stands at just over US$109 billion according to Coin Market Cap, compared to its peak of US$326 billion.
Will Bitcoin ever return to its previous highs?
Whilst I’m quite doubtful that this will happen any time soon or perhaps even at all, some experts believe that there are some major gains ahead.
According to CNBC, Arthur Hayes, the co-founder and CEO of the Bitcoin Mercantile Exchange, believes the cryptocurrency will reach US$50,000 by the end of the year. Bitcoin Mercantile Exchange is the largest cryptocurrency trading platform by volume.
While Hayes still thinks that Bitcoin could bottom out in the US$3,000 to US$5,000 range, he believes it is “one positive regulatory decision away, many an ETF approved by the SEC, to climbing through US$20,000 and even to US$50,000 by the end of the year.”
Hayes isn’t the only one that thinks Bitcoin would be a buy in this range. Renowned economist Mohamed El-Erian recently told the news outlet that Bitcoin would be a buy if the price fell below US$5,000.
The Allianz chief economist sees value in Bitcoin as a tradeable commodity rather than a currency.
Should you buy Bitcoin?
I would take Arthur Hayes’ prediction with a pinch of salt. As the head of a leading cryptocurrency exchange, it isn’t a surprise to see such a bold forecast. After all, his company stands to benefit greatly if the crypto market rebounds and traders return in large numbers.
But that doesn’t necessarily mean that Bitcoin won’t rebound eventually.
I agree with El-Erian that it would be worth considering if it fell below US$5,000. This is because the cost of mining a single Bitcoin is roughly at this level, so the price needs to remain above the mining costs for the system to work.
Though even then, Bitcoin and its peers Ripple (XRP), Ethereum (ETH), and Bitcoin Cash (BCH) are amongst the highest risk assets out there and largely unsuitable for most investors.
When a veritable investing and entrepreneurial genius speaks, it pays to listen.
In fact, he's now preparing a $100B "war chest" to invest entirely in this "terrifying" new technology, which could spell huge profits for investors.
Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.