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HOW CAN YOU READ?

The graphs were obtained by measuring the volatility of twelve months (blue line), which then went from week to week, thus determining the trend of volatility called "Rolling" and the same for the red line, which is volatile to six months .

For those who understand the series of financial history, they have a high rate of profitability, high volatility is required, and Bitcoin is the highest prince in this case, perhaps also the king of the historical series with high returns.

HISTORICAL RETURN

To use the average rate of performance, take into account the line of the exponential graph (which is actually the line that is growing exponentially in a linear graph (as described in the distinction of accounting between linear and logarithmic graph).

This straight line, which is practically the SEGURA ratio of the historical sequence of Bitcoin, shows that the average long-term average profitability will be incredible + 162%.

Taking the value of the current volatility in the 12 months or 79%, and the average yield of + 162%, we can perform simulations of Montecarlo (we have done 10,000 but we have just mentioned 100 to allow the table to read better) for Understand how the price of Bitcoin could evolve in the months and years to come.

QUESTION BY DÓLAR MILLÓ:

But, in the long term, these trends are sustainable?

Honestly, it is difficult to imagine, even if it is the intention of the creator of Bitcoin and the theoretical logic of scarcity, Bitcoin's price could exceed the $ 500,000 predicted by Bill Gates.

DECLARATION

After Bill Gates's claim that the price of Bitcoin would reach $ 500,000, I'm trying to understand how this investment of innovative assets can thrive through a classic model common to the world of traditional finances.

First of all, two parameters are needed to perform MonteCarlo simulations, that is, the volatility and the average rate of profitability.

As you can see, rolling volatility is very varied and average may not be significant, as it would be affected by the early years of the existence of Bitcoin, where volatility is more than 300%.

OBSERVATIONS

Whether it's a people of the plan that created Bitcoin, if Satoshi Nakamoto difficult to achieve or behind the pseudonym he uses to cover the search team, it can be guessed that they wait for 8 decimal places after the coma, which It is the price that Bitcoin can achieve, as structured, he remembers, the value of the stratosphere 100 million dollars or one hundred million rupees.

ASSUMPTION

The most exciting of the hypotheses, that is, the simulated "fortunate" of a thousand made, the estimation of this return and this volatility can be achieved as early as 2024.

We are talking about simulations and assumptions, which are surely compatible with the almost absolute expansion of Bitcoin as a global payment system, objectively impossible to imagine, but possibly from a computational and probabilistic point of view.

POSSIBLE '

Looking at the numbers, we can say that there is a 2% chance that Bitcoin will reach a silly $ 100 million price in 2025.

In order for this simulation of Monte Carlo to be reasonable, we must assume that the growth in the number of users continues exponentially, as described in the publication. How can we better understand what "Bubble Financial" means.

TRACKING

Therefore, I have increased the amount of exponential growth in the number of currencies in circulation so far, with an average growth rate of 1.3% per month (the last three years).

To assert that MonteCarlo's simulations with Media = 162% and Volatility = 79% make sense in the long run, it must be said that, by the year 2025, there are 4,500 million portfolios (something difficult to imagine).

OTHER SUBJECTS

At this point, I think it would be more appropriate to reduce the average annual growth over time and, therefore, I did two more simulations, the first assuming a sad annual return of 15% (slightly higher than the historical value of S & P500) , but maintains arbitrary volatility at 79% and the resulting graph is as follows:

As you can see, with high volatility, it could happen, because the cryptic pollution critics are satisfied that Bitcoin (although with the same probability lower than the previous example of 100 million dollars) can be returned to a value Of $ 10 sad, but to be honest, the average yield of 10 years, with an average profitability rate are low, but nevertheless high volatility over $ 110,000.

As usual in an arbitrary way, I tried to make a Montecarlo simulation with 10,000 assuming that the average return rate is much lower than the current one, but sufficient for a very high volatility that characterizes Bitcoin; Selected arbitrary as usual (there is no reason but after doing this simulation three weeks ago I do not remember more, forgive) to use an average annual return of 64% and a volatility of 79%.

SHARPE SUSTAINABLE

Why this choice, you will ask, because I was curious and I hope, too, to see where the price of Bitcoin could increase with the ratio of Sharpe is less than 1, so that everything makes sense.

In this case, there is no case in which its value falls to 10 dollars in one of 10,000 simulations.

HOW IS SHOWING

From this simulation, it is possible to extract the possibility of a Bitcoin price higher than a certain value, or, for example, what is the Bitcoin price of more than 5,000 probability in July 2018? From the graph we can conclude 98%, while reading it in the opposite way means that today we have about two percent opportunities that in June the price of Bitcoin will be less than 5,000 US dollars.

GOOD

To avoid being accused of bringing misfortune, on the contrary, what is the likelihood that the price of Bitcoin will exceed $ 50,000 in July 2018? Based on MonteCarlo simulations, a supposedly random 4.2% with the features mentioned above would have a value of more than $ 50,000 in July 2018.

But the most interesting thing is that there is a 50% chance that the price will rise to more than $ 50,000 in September 2023.

They do not take into account what to say for BE CONCLUSION

Clearly, the data obtained through random simulation should be considered questionable, but useful for understanding the dynamics, potential and risks, they offer innovative financial instruments (which I believe must be considered as a kind of " assets that will be made in the portfolio, the number of "homeopathic", of course),

INNOVATIVE PICTURES

Finally, I can only explain the block's opening graph: MonteCarlo simulations in each quarter offer a distribution of derivation derived from the simulation itself; To properly describe them as Gaussians, the exponential scale must be used in the abscissa, since the resulting distribution is clearly influenced by the high average profitability rate over the years, which makes the capitalization effect of exponential results properly

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