Bitcoin Price Prediction in 2021
2020 has been a record-breaking year for Bitcoin in many ways — after 3 years, it broke its previous record from late 2017. On December 1st, the price of Bitcoin overtook its previous peak of $19,850 and has since written new records, climbing to $29,159. And this bull run is still ongoing.
However, this recent price record is very different from that of 2017. First, while the 2017 price hike is considered to have been triggered by many individual investors all dealing with cryptocurrencies for the first time, the current bull run is centered on institutional investors who prepared their entry for a long time. Further, while initial coin offerings (ICO) that are considered bubbles generate demand for cryptocurrency only to see that demand decreases when the bubble bursts, the market is now underpinned by sturdy demand from institutional investors. In addition, the question of whether Bitcoin can serve as an alternative asset, which has long been a point of contention, is now increasingly being answered in the affirmative on Wall Street and beyond.
Another difference is the successive introduction of cryptocurrency by existing companies. PayPal, the world’s largest electronic payment company, started supporting Bitcoin trading and payment last October. In one fell swoop, Bitcoin payment became possible at 26 million PayPal affiliates. Multinational payment giant VISA is also planning to enable a payment system using cryptocurrency from next year.
In this way, the favorable atmosphere towards Bitcoin can be seen in the financial market. In a report published earlier this month, Bloomberg projected Bitcoin to reach a price peak of $50,000 by the end of next year. The Bloomberg report analyzed that the exceptional economic policies enacted to counter the economic slowdown brought on by COVID-19 has increased demand for Bitcoin and gold. Further, as governments and central banks around the world are unlikely to reduce or stop economic easing programs in the short-term, asset price inflation is expected to continue next year.
Julian Emanuel, chief equity and derivatives strategist at global financial service BTIC has set Bitcoin’s next target price at $50,000. Comparing Bitcoin price to that of the NYSE NASDAQ 100 index (NDX), he finds that “should Bitcoin’s speed of ascent keep pace with the past three years and the degree of the rally approximate that of NDX, $50,000 per Bitcoin is a reasonable year-end 2021 price target”.
This optimistic outlook is also shared by MicroStrategy, which recently purchased a massive quantity of Bitcoin. The company’s CEO Michael Saylor explained that he considered Bitcoin to be a good store of value and that this was a long-term investment. Over last August and September, MicroStrategy purchased 38,250 Bitcoin at an investment of $425M. The company further revealed that it still continues to purchase Bitcoin.
However, some are also of the opinion that there is a limit to the price surge, pointing to the sudden drop of Bitcoin, known as the crypto winter, right after it had reached its 2017 peak. Glen Goodman, a cryptocurrency expert, and investor from the London School of Economics said in an interview with Forbes “History has a warning for people buying at the new all-time-high. While I’m optimistic about the long-term prospects for bitcoin, four years ago we had a very similar situation with bitcoin breaking new ground, but just two weeks later its price plummeted by more than a third”. “History doesn’t always repeat itself, of course, but the lesson is to be on your guard”, he added.
Brian Armstrong, CEO of US-based cryptocurrency exchange Coinbase, warned that the Bitcoin price is rising too steeply. In the company’s blog, he wrote “While it’s great to see market rallies and see news organizations turn attention to this emerging asset class in a new way, we cannot emphasize enough how important it is to understand that investing in crypto is not without risk […] Like all asset classes, crypto markets will rise and fall over time.”
Despite these negative views, the majority thinks Bitcoin’s long-term prospects are mostly bright. Particularly, as economic easing policies around the world are further accelerating asset inflation, more and more people are finding that Bitcoin can act as a store of value similar to gold. Ray Dalio, the founder of one of the world’s leading hedge funds, Bridgewater Associates, had long-since been negative on Bitcoin, but recently changed his stance. On an ‘Ask Me Anything’ session held on Reddit on the 8th, he stated that Bitcoin “could serve as a diversifier to gold and other such storehold of wealth assets”, adding that “the main thing is to have some of these type of assets […] including stocks, in one’s portfolio and to diversify among them.” Bitcoin’s function as a store of value is thus being recognized.
As 2021 approaches, the trend of recognizing Bitcoin for its value as an asset is expected to continue. This is a different situation from 2017 when the rally ended within a month and was considered a bubble. Nevertheless, while Bitcoin’s bull run is expected to hold strong, as Coinbase’s Brian Armstrong said, its high volatility poses a risk for individual investors. Here, Haru can catch two birds with one stone, as it effectively uses Bitcoin’s volatility while securing profit from its price increase, thereby offering both stability and profit.
Haru is a trusted digital asset management platform. We provide up to 16% earn rates for monthly deposits of BTC, ETH, USDT, and Terra KRT. What we offer aims to shift a paradigm of investment — investing in crypto can be stable and comfortable, too. Crypto in, more crypto out. It’s that simple.
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