Breaking $40K & What to Expect in 2021
From the start of the year, the Bitcoin price has been skyrocketing. After reaching a new peak at the end of last year, the bull run is continuing in the new year. Recently, Bitcoin again hit a new all-time high at $41,600 and keeps setting new records.
But this price surge is considered different in many ways from the rapid growth in 2017, 2018. The sudden climb in 2017 was started by many individual investors simultaneously entering the market and dealing with cryptocurrency for the first time. The present bull run, on the other hand, is being led by institutional investors who are entering after a long period of preparation. Grayscale, a Digital Currency Group subsidiary, is currently managing $25bn in cryptocurrency assets. Numerous notable investors, including Rothschild, are known to have invested here.
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. On Wall Street, too, the opinion is on the rise that Bitcoin can be considered as digital gold. According to Bloomberg, JP Morgan Chase recently stated the expectation that if Bitcoin cements its place as an alternative currency equivalent to gold, its value could rise up to $146,000.
Established companies are also successively introducing cryptocurrency. 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 also be seen in the financial information market. In a report published at the end of last year, Bloomberg projected Bitcoin to reach a price peak of $50,000 in 2021. The Bloomberg report analyzes that the exceptional economic policies enacted to counter the economic slowdown brought on by COVID-19 have 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 the Bitcoin price with 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”.
Of course, some are also of the opinion that there is a limit to the price surge. 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 some negative views, the majority opinion is that Bitcoin’s long-term prospects are mostly bright. Particularly as economic easing policies around the world enacted in response to the COVID-19 pandemic 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 December 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.
In 2021, 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, the 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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