Ecoinometrics - Bitcoin in 5 years

Today one Bitcoin is worth about $20k. Where is it likely to be in 5 years? And are you getting good odds by making a bet on it now?

Today one Bitcoin is worth about $20k. Where is it likely to be in 5 years? And are you getting good odds by making a bet on it now?

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Bitcoin in 5 years

Last week we discussed a framework to think of investment opportunities as bets. If you remember there are six questions you should ask to judge an investment opportunity:

1. What is the potential upside on that trade?

2. How long will it take to reach that upside target?

3. How likely is it that the target will be reached during that timeframe?

4. Where is the downside at which I should take my losses?

5. How likely is it that we’ll hit that downside level? 

6. How much am I willing to lose on this trade?

The idea behind those questions is pretty simple.

You need to ask (1) because if there is no real upside potential to start with then there is no point in taking the trade.

But gauging how long it might take for your bet to play out is also important.