Price Predictions for 10 Top Cryptocurrencies

So, you’re sitting at your computer with money to invest.

You have made some good money already in the market, but you want more.

Cryptocurrencies have reached a record $600 billion in market value after the recovery, with the inevitable $700 billion mark right around the corner.

The price movement of top currencies remains a mystery. But it doesn’t have to be.

THE PAIN OF UNCERTAINTY

Cryptocurrencies are volatile, irrational beasts.

Simple methods of forecasting grossly over/underestimate the potential of a volatile currency.

For example, moving averages are used frequently to estimate future prices. Moving averages, however, suffer from many pitfalls that make them poor estimators of volatile markets.

Every great and successful investor has a plan. You will add one more tool to your arsenal today.

A BETTER METHOD FOR ESTIMATING CRYPTO PRICES

In my prior article about estimating the movement of Bitcoin Prices, I spoke of a method that is used frequently in the stock world to estimate prices.

This method is a Monte Carlo simulation using the geometric Brownian motion model.

I won’t cover off on the full methodology here, but essentially I am going to:

1.       Get historical daily prices for 10 top cryptocurrencies

2.      Calculate daily returns

3.      Simulate a year

4.      Simulate a year many times

By the end of the article, you will have the following:

·         A one-year simulation of top cryptocurrencies

·         Likely price range of each cryptocurrency

·         A downloadable model to complete yourself

A note on forecasting, simulations, and recommendations: Monte Carlo simulations are to be used as guidelines and tools, not as gospel. I am not offering financial or investing advice.

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BITCOIN

What is Bitcoin?

You know what Bitcoin is, stop it.

Verdict

We can be 95% certain that Bitcoin prices will fall between $4,179, and $273,028 with a median of $31,380.

BITCOIN CASH

What is Bitcoin Cash?

From the Bitcoin Cash project website:

“Bitcoin Cash is peer-to-peer electronic cash for the Internet. It is fully decentralized, with no central bank and requires no trusted third parties to operate.”

Really, it was an additional currency that was created after a fork from Bitcoin core.

Verdict

We can be 95% certain that Bitcoin Cash prices will fall between $94, and $94,225 with a median of $2,899.

ETHEREUM

What is Ethereum?

Ethereum is a decentralized platform that runs smart contracts: applications that run exactly as programmed without any possibility of downtime, censorship, fraud or third party interference.

Ethereum has been busy recently. Multiple steps have been pushed in motion for the upcoming large change — reaching a new consensus method.

From Jordan Daniel at ethnews.com:

Ethereum’s Byzantium hard fork was only one half of a two-part process designed to transition the decentralized application platform to a new method for reaching consensus — proof-of-stake. The next hard fork, called Constantinople, was recently discussed during an Ethereum core developer meeting and could include VitalikButerin’s Casper update.

Verdict

We can be 95% certain that Ethereum prices will fall between $706, and $30,062 with a median of $4,791.

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EOS

What is EOS?

EOS is a blockchain-based, decentralized operating system, designed to support commercial-scale decentralized applications by providing all of the necessary core functionality, enabling businesses to build blockchain applications in a way similar to web-based applications.

Verdict

We can be 95% certain that EOS prices will fall between $9.58, and $14,898 with a median of $307.

LITECOIN

What is Litecoin?

Litecoin is a peer-to-peer Internet currency that enables instant, near-zero cost payments to anyone in the world. Litecoin is an open source, global payment network that is fully decentralized without any central authorities.

Mathematics secures the network and empowers individuals to control their own finances. Litecoin features faster transaction confirmation times and improved storage efficiency than the leading math-based currency.

With substantial industry support, trade volume and liquidity, Litecoin is a proven medium of commerce complementary to Bitcoin.

Verdict

We can be 95% certain that Litecoin prices will fall between $30, and $7,636 with a median of $472.

OMISEGO

What is OmiseGO?

OmiseGO is building a couple of things:

1.       Decentralized exchange

2.      Liquidity provider mechanism

3.      Clearinghouse messaging network

4.      Asset-backed blockchain gateway

OmiseGO is not owned by any single one party. Instead, it is an open distributed network of validators which enforce behavior of all participants.

According to Blocknight:

Also, OmiseGo counts VitalikButerin (Ethereum), and Joseph Poon (Lightning Network Co Author) among their advisers. Joseph Poon is actually billed as author of the OmiseGo whitepaper.

Those are some pretty big names.

Verdict

We can be 95% certain that OmiseGO prices will fall between $1.17, and $190.71 with a median of $15.74.

NEO

What is NEO?

NEO (formerly known as AntShares) is a smart asset platform and the first open source public blockchain project in China. Smart assets are the combination of smart blockchain contracts and digital assets.

Verdict

We can be 95% certain that NEO prices will fall between $27, and $13,229 with a median of $458.

RIPPLE

What is Ripple?

Ripple is a system created for banks to enable immediate payments and lower costs.

The vision of the Ripple creators is to allow a bank transfer in a few seconds (instead of the horribly annoying 2–3 business days).

Of note, is that Ripple is a U.S. based company. From the xrphodor blog:

Ripple is a US-based company.

Why is this an important point to consider? A US-based company like Ripple is subject to some very stringent laws regarding securities trading and money transmission. These include requirements that define how Ripple might interact with crypto markets and both institutional and retail crypto traders.

Verdict

We can be 95% certain that Ripple prices will fall between $0.02, and $175 with a median of $2.12.

MONERO

What is Monero?

Monero attempts to solve privacy and fungibility issues that persist in Bitcoin.

Part of the algorithm for Monero automatically mixes transactions with previous transactions and does this by implementing ring signatures.

Verdict

We can be 95% certain that Monero prices will fall between $88, and $10,338 with a median of $972.

IOTA

What is IOTA?

IOTA enables companies to explore new business-2-business models by making every technological resource a potential service to be traded on an open market in real time, with no fees.

The main innovation behind IOTA is the Tangle, a revolutionary new blockless distributed ledger which is scalable, lightweight and for the first time ever makes it possible to transfer value without any fees.

Contrary to today’s Blockchains, consensus is no-longer decoupled but instead an intrinsic part of the system, leading to decentralized and self-regulating peer-to-peer network.

Verdict

We can be 95% certain that IOTA prices will fall between $0.13, and $175 with a median of $4.55.

YOUR VERY OWN FORECASTING TOOL

Since i’m so nice, I went ahead and created a forecasting tool for you to use.

SERVICES USED:

1.       Google Sheets

2.      Spreadstreet Google Sheets Add-in

3.      StockTwits

4.      CoinMarketCap API

Full disclosure: The google sheets add-in is a 14-day free trial, and $15 per month after. However, no one should be refused access on the basis of money (especially true for students and less fortunate). Send me a message, and I will make sure you are not left in the dark.

A NOTE ON SECURITY

Users have expressed hesitation about running a google sheets add-in on their main computer, so I will attempt to ease those concerns:

·         I am located in the U.S., and my business is registered in the state of Maryland

·         If this were malicious, people would have downvoted the add-in into oblivion, and it would have been removed from the store

·         If you are still worried, you can open it within a virtual machine and test it first

WHAT IT PULLS:

·         90-day history of ~24 different cryptocurrencies

·         1-Year simulation of prices

·         1-Year simulation of returns

·         1-Year simulation ran 1,000 times

GETTING THE SPREADSHEET TO WORK FOR YOU

1. Install the Spreadstreet add-in for Google Sheets

·         Click this link to download the Spreadstreet Google Sheets Add-in

·         Follow the installation instructions included with the add-in and log-in

2. Get sheet ready for use with the add-in

·         Important Open the template, click the menu Add-ons / Spreadstreet / Help / View in store, and then click Manage and in the dropdown menu click Use in this document.

·         Login to the Spreadstreet add-in for the first time (Add-ons ->Spreadstreet -> Open) and keep the window open

3. After logging into the add-in, change the dropdown reference

·         In the analysis tab, change the “SELECT CURRENCY” dropdown (B3) to one of the other choices…this refreshes the pull

·         Note: CoinMarketCap API has limits. Be careful when attempting to refresh the sheet too many times

TROUBLESHOOTING

1.       Important Open the template, click the menu Add-ons / Spreadstreet / Help / View in store, and then click Manage and in the dropdown menu click “Use in this document.”

2.      A reload of the entire worksheet fixes quite a few problems.

3.      Deleting and re-pasting the formula in A1 of the “Candles” tab fixes things as well.

4.      If all else fails, drop me a message

5.      The “SELECT CURRENCY” cell in the Analysis tab (B3) refreshes the pull. Change the results for new data.

When I try and change a coin, I get a #DIV/0 error

Login to the Spreadstreet add-in, and keep the window open. Try changing the dropdown again.

I have tried logging in, activating the template with “Use in this document” and refreshed the sheet…still nothing.

Head to the “Data” tab. Delete the formula in cell A1, and repaste the following: =SS(“candles-bitfinex”, ticker, “1D”, “hist”, true, “”, “”, “”, “0”)

CONCLUSION

Whether you are investing in Bitcoin, Ethereum, or SpankCoin, it is imperative to have a plan. Most notably, a worst-case scenario.

The Monte Carlo simulation is a fantastic way to get a range of prices for a cryptocurrency. And after reading this, you can see how the final values change drastically depending on what you are looking at.

I urge you to download the sheet and try your own hand at simulating different coins. The sheet is setup to pull in every single coin from CoinMarketCap.

 

Source

Read about the better investment, Bitcoin, Ethereum, Litecoin, or Ripple

Out of the choices above, Ethereum.

Before we look at the coins in detail, let's start with the potential ROI (100% = 2x Original Investment).

Bitcoin’s current market cap is $193,165,354,468 in order for you to make 100% this number would need to double to just under $400 Billion.

Ethereum’s current market cap is $44,715,990,083 , roughly 1/5th of Bitcoins. In order for you to make 100% the price would need to increase to just under $90 Billion. - Mathematically this is more probable.

Ripple’s current Market Cap is $9,738,948,906 in order for you to make 100% this would need to increase to just under 20 Billion. This is the most mathematically possible.

Which cryptocurrencies are investors more likely to put their money into?

Bitcoin

What is Bitcoin?

A purely peer-to-peer version of electronic cash would allow online payments to be sent directly from one party to another without the burdens of going through a financial institution. Digital signatures provide part of the solution, but the main benefits are lost if a trusted party is still required to prevent double-spending. We propose a solution to the double-spending problem using a peer-to-peer network. The network timestamps transactions by hashingthem into an ongoing chain of hash-based proof-of-work, forming a record that cannot be changed without redoing the proof-of-work. The longest chain not only serves as proof of the sequence of events witnessed, but proof that it came from the largest pool of CPU power. As long as honest nodes control the most CPU power on the network, they can generate the longest chain and outpace any attackers. The network itself requires minimal structure. Messages are broadcasted on a best effort basis, and nodes can leave and rejoin the network at will, accepting the longest proof-of-work chain as proof of what happened while they were gone.

Peer-to-Peer (P2P): is a technical way of saying computers (peers) that are connected together via the internet.

Timestamps: are a sequence of characters that identify exactly when a certain event occurred, giving the exact time and date.

Hashing: is the process of compacting large quantities of data into smaller fixed sizes (the image below might help)

Proof-of-work: is the verification that the individual peer created the said hash

Nodes: are computers that are connected to the blockchain

Bitcoin is a first generation cryptocurrency, that was created in 2009 with the intention to become the currency of the internet. However, Bitcoin faces several scalability issues.

The Problems with Bitcoin

1. Energy consumption

A study from Digiconomist found that each transaction on the Bitcoinblockchain uses 236 KWh worth of electricity, this amount is enough to power 8 U.S households for an entire day.

Now to put things into perspective, there are over 300,000 transactions per day. At this rate, Bitcoin uses more electricity per year than the whole of Nigeria and this is only increasing.

Read more here: Bitcoin Energy Consumption Index - Digiconomist

Proof of work is vastly uneconomic and damages the environment at an alarming rate.

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2. Scalability issues

Energy consumption will hinder the scalability issues of Bitcoin, however the other issue that arises with POW mining is that with the increase in cost associated with mining BTC it is less economical to mine Bitcoin. This would limit the distributed nodes (miners) globally and allow a larger percentage of control to the dominant mining pools / farms.

This would lead to a more centralised blockchain, where they can change the rules of BTC as they please.

The supply of Bitcoin is finite, capped at 21 million. Eventually (currently predicted for 2140) Bitcoin's supply will run out. Once this happens, miners will no longer receive rewards for completing blocks but instead will be given fees. The fees will be drastically high in relative terms, and people will stop using the blockchain.

Also, if miners decide that this is uneconomical for them to process the transactions and use their computing power elsewhere the speed of transactions for Bitcoin will drastically slow down, rendering one of the fundamental values of a Bitcoin (speed) useless.

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3. The unknown future

Bitcoin is not a superior blockchain, there are hundreds of projects that are faster, cheaper and more valuable than Bitcoin. Bitcoin has market dominance because it is one of the first and most topical cryptocurrency (did you know that the price of BTC has a direct correlation to the amount of google searches). Here are a few things that could really end Bitcoin’s dominant era:

I) Blue chip company coming into the markets

This is more so for all cryptocurrencies, but Bitcoin in particular. It’s not a matter of if but a matter of when a blue-chip company such as Facebook, Amazon or Google decides to implement their own cryptocurrency, they will dominate the market.

The consumer's trust is already with these big companies, and they have the power and capital to influence the entire market.

Another possibility is a potential ‘world coin’ which global governments will all agree on using, this may seem unrealistic but it is definitely not impossible and many benefits would arise from having such a currency.

II) Quantum computing

Bitcoin is said to be Quantum resistant, on the whitepaper it mentions that:

‘To compensate for increasing hardware speed and varying interest in running nodes over time, the proof-of-work difficulty is determined by a moving average targeting an average number of blocks per hour. If they're generated too fast, the difficulty increases.’

This may seem quantum resistant but it is important to understand that the difficulty is changed every 10 minutes and this is more than enough time for QC to mine all of Bitcoin’s remaining coins.

The other issued that QC represents is that there is a possibility of QC calculating people’s private keys for their BTC wallet. I do not know the technical details of how this is done, but from what I have read this is possible.

III) Bitcoin bubble

My last point for this section is that Bitcoin is not being bought as a store of value or a currency by most people, for most people Bitcoin is a speculative investment hoping to make a fortune on something they really don’t know much about.

Once the bubble reaches its peak, and people start panic selling, Bitcoin will inevitably crash with that. After all, Bitcoin’s price is determined by demand vs supply.

To conclude, Bitcoin’s price is driven by demand. With the massive publicity of Bitcoin, and the introduction of Bitcoin Futures, this has lead to a massive increase in price.

However as an investment, I believe the scalability issues will hinder BTC’s growth.

Ethereum

What is Ethereum?

Ethereum was created in 2015 by a man called VitalikButerin.

Vitalik had the vision of not only having a decentralised cryptocurrency (like Bitcoin) but also allowing decentralised applications to be created on the Ethereumblockchain that use Smart Contracts.

The whole idea of blockchain is to remove the power from the third parties and allow the user to control their own data.

What is a decentralised application?

“Ethereum is a decentralized platform that runs smart contracts: applications that run exactly as programmed without any possibility of downtime, censorship, fraud or third-party interference.

These apps run on a custom built blockchain, an enormously powerful shared global infrastructure that can move value around and represent the ownership of property.

This enables developers to create markets, store registries of debts or promises, move funds in accordance with instructions given long in the past (like a will or a futures contract) and many other things that have not been invented yet, all without a middle man or counterparty risk.” - Ethereum Project

To understand this better, I’m going to give an example of how decentralised apps and smart contracts will change the world we live in:

I’ll use pizza as my example, because everyone can relate to pizza!

Say you wanted to order pizza to your house, you have to create an account, enter your banking details and give the app your address to receive your pizza. Many people overlook the risks that are associated with trusting a third party to handle such sensitive data. If this companies' servers are hacked into, the hacker will have your bank details and your address… Scary stuff.

So, you ordered a chicken BBQ pizza, which is everyone’s favorite, and they turn up with a ham and pineapple pizza (wtf), or worse yet they don’t turn up at all! As you have already paid for this pizza, what do you do? The process of refunding this money, is entirely reliant on a third party (often PayPal or your bank) and can take weeks if the refund even happens. Placing your trust in this pizza company is again a risk that is overlooked.

Now let’s use the same example using Ethereum’sblockchain.

You want to buy pizza, you go onto the decentralised app and place your order – your data is stored on the blockchain and you give permission via a smart contract for the pizza company to view your address.

Your order is created in a smart contract and once the order is delivered and verified by you that it is correct, the funds are released to the pizza company.

This may seem minor for a pizza company, but think about more expensive goods and services that users will benefit from this blockchain.

Here’s a few:

·         A smart contract can be created to pay a worker for every hour they work, they log their hours on the blockchain and then after verification the funds are instantly transferred to them

·         Buying goods internationally can be tracked and verified – reducing fraud.

·         Property buying can be facilitated through the contract

·         Every industry that has a contract in place will be able to use the blockchain of Ethereum

I hope that it is now clear that the technology behind Ethereum will have a real world use and change how business operates entirely.

It is worth noting that Ethereum is also vastly quicker than BTC, average block time being 15 seconds for Ethereum opposed to 10 minutes for BTC.

Ethereum is a second generation blockchain, and the implementation of smart contracts and decentralised applications makes it a far more valuable investment in my opinion.

Ripple.

Ripple connects banks, payment providers, digital asset exchanges and corporates via RippleNet to provide one frictionless experience to send money globally.

I do not invest in Ripple for the reasoning that they sell their tokens at a discounted rate to banks and financial institutions and also they hold a large amount of their cryptocurrency which from 2018 can be sold.

Thanks for reading,

Devin

P.S. If you sign up, you’ll receive an exclusive email that details the top 5 cryptocurrencies I invest in and why.

Answered by Devin Milsom

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