This article covers two predictions I am making based on economic theory, one prediction on a bitcoin-denominated stock price and the other on the effects of Colorado marijuana tax policy.
PETA is an unregulated stock-like commodity, denominated in bitcoin and traded on Havelock. As discussed here, they recently came out with a product that significantly beat quality expectations. I argued that their product out-competed their nearest competition by 74% and also offered a unique positive feature that the competition did not. I argued that this implied a value of .17BTC/share. To all of my super great readers here, I’ve revised that down to a value of .12/share, but it’s still undervalued. I predict that the price will rise above .12, maybe hitting .17, and correct to about .12+-.02 then stabilize over the course of the next month.
PETA was also a case study for manipulating price through information control for me. Reddit.com/r/bitcoin and bitcointalk.com account for well near all of the communication in the bitcoin commodity market. I put up a positive article on reddit and talked positively on bitcointalk, as did some others when the news came out. As a result, price spiked well above fundamental justification, consistent with the herd investment effect we know so well.
I also want to make a prediction as a response to this article. The article makes the point that pot in Colorado has been discovered to sometimes have contaminant, but that the federal government refuses to take action because it is technically illegal anyway and the federal position is to selectively non-enforce pot laws. My prediction is two-fold: 1) If no level of government gets involved and the market remains free, the contamination problem will rapidly self-correct: 5% or larger change in 3 months or less, and 2) Some level of government, probably State level, will try to get involved in regulating the ‘problem,’ only slowing the natural market correction.
By the way, Colorado tax revenue from marijuana is far surpassing expectations and the economy is really building because of legalization. In conclusion, lack of regulation is good.