The price of bitcoin can be expected to rise to $400 over the next 12 months, according to a new report by Wedbush Securities.
Authored by Gil Luria and Aaron Turner, the report begins with the goal of forecasting the future value of shares in the Bitcoin Investment Trust (GBTC), the first publicly traded bitcoin fund launched in March, ultimately concluding that the fund will likely outperform its current $30.60 price to rise to $40 next year.
In its calculations, however, Wedbush expands on its approach to valuing bitcoin based on its expected penetration of large target markets. The bitcoin payments network, it suggests, could end up powering 10% of online payments and 20% of global remittances by 2025
The report reads:
“By aggregating the utilization of the various applications, we arrive at our $400 BTC price target, which translates to $40 per share of GBTC. This implies [roughly] $6bn market capitalization, which we would also describe an option on bitcoin supplanting some payment volumes from Visa, MasterCard, PayPal and Western Union, who combine for [less than] $300bn in market cap.”
Wedbush indicated it sees bitcoin demand stemming from its increasing use in e-commerce payments, remittances and micropayments due to its ability to reduce costs in these industries. For instance, the report estimates bitcoin can lower online payments fees from 3-8% to less than 0.5%, while it can cut the cost of remittances from 5-10% to less than 1%.
Secondary to these industries, the report predicts, will be bitcoin’s growth as a “banking alternative” in times of economic crisis, its applications for machine-to-machine transactions and applications of the blockchain as a distributed ledger.
Speaking to CoinDesk, author Gil Luria indicated that the goal of the paper was to answer a question that has long been the subject of theory, but little actual
Originally appeared at: http://www.coindesk.com/wedbush-report-projects-400-bitcoin-price-by-2016/