Ecclectic analyst Ronnie Moas, better perhaps known as the one-man show behind Standpoint Research, ventured into the field of cryptocurrencies this morning when, in a note to clients he predicted that Bitcoin will double to $5,000 in 2018 - roughly in line with Goldman's recent bullish outlook which sees Bitcoin rising just shy of $4,000 in a best case scenario - then hit $25,000 to $50,000 in the next decade.
Moas' bullish view - he said he bought “a little bit” of litecoin, bitcoin and ethereum in a Coinbase.com account - is predicated on the assumption that while the broader market could undergo a correction in the near term, over the next decade it has only one way to go:
The cryptocurrency market, if you play it wisely, is actually appreciating at a rapid rate, and even though you missed out on the big move in the last few years, it was a big move off of a very low base and this industry is still in its infancy relative to where it could go in the next 5-10 years.
Moas said he’s “only a bit concerned that there may be a near-term bubble,” but long term, there’s potential to make triple-digit returns.
His logic is simple, and is based on comparative market share:
Bitcoin market cap is now $40 bln and Ethereum is at $20 bln. Looks as though there is legitimacy there. They have run up a lot already, but crypto-currencies are still just 1.00% of Gold ($8 trillion) and 0.10% compared to stocks and cash.
If this is legitimate and crypto-currencies capture 1.0%-1.5% of the stocks and cash market share, then you are looking at a situation where a $100,000 investment today could be worth more than $1,000,000 a few years (or more) down the line.
Another reason why he is bullish: "I am looking at what the size of this crypto-currency market (~$80 bln) is relative to the ~$8 trillion gold market (1.00%) and the (~$80 trillion) stocks/cash market (0.10%). Many people have gold in their portfolios, and watching what their gold is doing for them is like watching paint dry on the wall. If you are in stocks, the stock market is at an all-time high and you have to worry about that losing value in the near- to mid-term."
He sees a binary outcome: "This will either crash and burn … or continue to go higher and take market share away from stocks and currencies."
He adds that “there are only 21,000,000 bitcoins in circulation and the world will fight over those 21 million coins as confidence in currency and other investments deteriorates. I have little doubt that 1% of the money in cash, bonds, stocks and gold will end up in cryptocurrencies.”
His lack of doubt on the flow of funds into cryptos is why he is comfortable with his dramatic recommendation:
Just as with any stock recommendation, I can give you ten reasons why you should buy and ten reasons why you should sell or sit on the sidelines. I can afford to lose $25,000-$50,000 on this. What would be more painful is sitting on the sidelines and watch this jump by 500%, 1000% or 2000% over the next 5-10 years. My initial/gut instinct tells me that this is what will happen.
To be sure, Moas admits that he is only "in the early stages of my research. I quickly dismissed it back in 2013, 2014, 2015 and 2016. Now, we are in 2017 -- the market cap is $80 billion and I (and others) must take it a bit more seriously" and he promises to publish a 40-page report on cryptocurrencies in August, although one can probably guess his conclusion.
According to Bloomberg, Moas' euphoria is a "testament to the exuberance around bitcoin, ethereum and other blockchain assets that equity investors who hadn’t been involved in cryptocurrencies are now starting to analyze and make bets on the sector along with established bitcoin enthusiasts who see long-term gains, even if they say there might be a correction after the recent rally."
Perhaps, or perhaps like many other slow adopters Moas is just late in jumping on what the crypto bubble, which if more share Moas' sentiment, will become far bigger before it finally bursts:
I have concerns about crypto-currency but my bias right now is thinking that this is something legitimate and that it is too late for regulators and the (threatened) financial services industry to get this back in the box the same way yellow taxis can’t get Uber back in the box. Just as Uber is now too big to crack down on, so are Bitcoin and Ethereum. I am very excited about this opportunity (and I hope it is justified). In fact, I opened up an account today and already bought some Litecoin, Bitcoin and Ethereum for myself.
His parting words, to the skeptics: "It will probably be more upsetting to watch it go up another 1,000% (from the sidelines)."