Peak Prices: the Problems of Money Illusion and Regularity of Returns
Dear Readers,
With BTC currently breaking to new highs, people are naturally focused on possible peak price, for as we all know - Bitcoin is volatile. This article will look at the way in which the peak can be both under-estimated on the one hand, and over-estimated on the other. In the first case of under-estimation, I’ll describe the way in which money illusion, the focus on nominal values as opposed to real values, contributes to this. In the second case of over-estimation, I’ll describe how a bias toward non-diminishing returns [or regularity of returns] leads to a possible exaggerated expectation.
If these two cases provide the extremes, then a more modelled and technical projection of peak prices will lastly seek to provide a moderate and realistic price projection between them.
For access to full article and archive to previous articles, make sure to subscribe now.