Bitcoin: $5,000 or $50,000… there’s no in-between

The struggle with $9,000 and even the $10,000 levels were taxing on bitcoin but the journey ahead might not be the same. The bull run of 2016-17 blew past the ATH of 2013 bull run. Hence, we can assume that $20,000 will not be a huge level of resistance.

As for the important level, the $13,000-$15,000 range seems like a tough nut to crack. Hence, breaching past these levels would easily push bitcoin to $20,000 and even higher. Vinny Lingham, the CEO of CivicKey, said that if bitcoin doubled here [ie., at $10,000] then it would “likely go past $50,000”.

To further understand what Lingham is trying to say, it is necessary to understand what Sharpe Ratio is. It is a way to measure the performance of an investment by comparing the return of that asset to its risk. Sharpe ratio is the average return “earned in excess of the risk-free rate per unit of volatility or total risk.”

Lingham further explained that the “typical Sharpe ratio calculation “does not “conform” to bitcoin. Illustrating a plausible example, Lingham stated,

“A typical Sharpe Ratio with a 50% downside projection (~$5k) and a 200% upside projection ($20k) would produce a Sharpe Ratio of 4. If you do the adjustment to $50k, the adjusted Sharpe Ratio would be 10 – which is an usually great bet”

However, the problem, according to Vinny Lingham is that the Sharpe ratio does not work the way it does for the traditional assets. Also, as mentioned at the start, the bull run tends to breeze past the ATH of the previous bull run.

Lingham stated that this was not a prediction/projection but that it was “unlikely that #Bitcoin can ‘only’ double from here, it’s either going to $5k or $50k” and that $20,000 isn’t a resting place for bitcoin.