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No matter what Bitcoin is doing there is always plenty of specultion and comments about what it will do next. This article in the Quota Digest by
Mark V Wagner on January 22 is no different, The question juat how right will he be?
As we move the end of Jan 2021, (I change this to be more ccurate), crypto traders start thinking about Bitcoin predictions for the next 12 months. Searching the web, you will inevitably face the headlines of Bitcoin being on track to a new all-time high, backed by the bullish views of numerous analysts setting brilliant price targets for BTC in 2021.
Bitcoin future value predictions start with $100,000 from the Stock-to-Flow (S&F) forecast model, to $170,000 predicted by Bloomberg strategist Mike McGlone, and go higher to $318,000 – the target set by Tom Fitzpatrick, the Citibank’s analyst who called Bitcoin the “21st century gold”.
Will Bitcoin rise so high? To get a clearer picture of what is going on with Bitcoin price analysis, we will consider the major BTC price drivers and try to build the Bitcoin 2021 prediction that may help you decide whether you are a bull or a bear for your future BTC trade.
Bitcoin has already given us good reasons to believe its price is on the verge of a new all-time high. Following the latest BTC analysis we can’t help but mention the exceptional performance shown by the forever-number-one cryptocurrency.
The end of November 2020 surprises traders with Bitcoin steadily moving up to $19,000. In less than two months, Bitcoin has gained 90 per cent of its value, climbing from $10,400 on October 1 to $18,900 on November 21, 2020. Recently, Bitcoin’s market capitalisation reached a high of $337 billion, which exceeded its prior record of $328 billion from December 2017.
The cryptocurrency has been moving closer to $20,000 for the first time in three years. If it manages to break through this serious psychological milestone, traders should be equipped with a detailed BTC projection to catch the best opportunity.
Among the most important factors that can help Bitcoin to break a new record are the growing institutional demand, the breach of $18,500 (a strong resistance barrier) and reduced selling pressure.
Selling pressure goes down
When Bitcoin holders want to sell BTC, they usually have to deposit first on exchanges. When the Bitcoin exchange registers a drop, it usually means that there is a low sell-side pressure in the market.
According to Glassnode, the year-to-date Bitcoin balance on exchanges fell 18 per cent, which indicates that Bitcoin liquidity is going downward.
In a broader sense, this data shows that Bitcoin holders are not going to sell their BTC at its current price level, despite that it rallied from $3,600 up to $18,800 within eight months.
Demand from institutional investors goes up
According to BlackRock’s chief investment officer of fixed income, Rick Rieder, Bitcoin “is here to stay”. In his interview with CNBC, Rieder highlighted that millennials are open to cryptocurrencies and prone to digital payments, which serves as a good reason for Bitcoin adoption.
JP Morgan shares Reider’s view that Bitcoin can potentially “replace gold to a large extent”. According to JPMorgan’s note from October 2020, Bitcoin is ready for “considerable” upside, as it competes with gold as an alternative currency: “Even a modest crowding out of gold as an 'alternative' currency over the longer term would imply doubling or tripling of the bitcoin price”.
Millennials’ support can accelerate further adoption of Bitcoin and strengthen its status as both a means of payment and a store of wealth.
Analysing the institutional trends, the Galaxy Digital CEO and billionaire investor Mike Novogratz believes that the Bitcoin boom in 2020 is driven by institutional buy-in and investors willing to hedge against traditional paper money.
New Bitcoin adepts: PayPal, Square and Fidelity Investment
In October 2020, the international payments provider PayPal enabled its clients to sell and buy Bitcoin and other cryptocurrencies right from their accounts. According to Bloomberg, 26 million merchants from PayPal’s network started accepting cryptocurrencies.
Payment service Square also decided to hold part of its cash money in Bitcoin. The company bought 4,709 Bitcoin, which cost around $50 million. This money represents almost one per cent of total assets of Square as of the end of the second quarter of 2020.
Earlier this year, one of the largest asset managers in the world – Fidelity Investments with $3.3 trillion assets in assets – introduced the creation of its first Bitcoin mutual fund.
Price of Bitcoin breaks out above 18,500
As Bitcoin breaks one barrier after another, the confidence that the market has enough momentum to break through the crucial resistance levels mounts.
On November 18, Bitcoin plunged sharply from $18,500 to around $17,200, just a couple of minutes after reaching its two-year high. A couple of days later, Bitcoin hit another multi-month high of around $19,000.
Bitcoin price prediction 2021
It’s a rare occasion when analysts are so unanimous in their Bitcoin predictions. While the price targets for the Bitcoin projected value differ, everyone seems bullish about the BTC/USD shiny rally in 2021.
Sharing his view on the BTC price prediction 2021, Tom Lee, the managing partner of Fundstrat Global Advisors, supported the view that Bitcoin will replace gold as a hedge against inflation and a store of value.
How high will Bitcoin go up?
The billionaire investor expects the price of Bitcoin to surge to $65,000, suggesting 2021 to be a good time to be a buyer. He believes that Bitcoin will hit $20,000, then it could pull back again to around $16,000, before going up above $60,000 by the end of 2021 due to the “network effect” with a pull of new buyers and lower Bitcoin supply.
Novogratz expects that Bitcoin scarcity will help to drive Bitcoin price in the coming years as Bitcoin holders start viewing it as a store of value rather than a purely speculative asset.
According to the creator of a popular bitcoin prediction model Stock-to-Flow (S2F), who uses the Twitter name “PlanB”, the benchmark cryptocurrency will reach $100,000 by December 2021.
The S2F model calculates the Bitcoin expected price 2021 by considering its decreasing supply and growing demand. As Bitcoin is halved every four years, the supply is gradually diminishing and inflation is rising. In theory, this could boost the demand for Bitcoin and cause a drastic surge of the BTC price.
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During the second halving in July 2016, Bitcoin price was fluctuating at around $640. Seventeen months later Bitcoin surged to its all-time-high of $20,000. If the pattern repeats, Bitcoin can reach from $100,000 to $288,000 by December 2021.
On the other hand
Consumers should be wary if they’re contacted out of the blue, pressured to invest quickly or promised returns that sound too good to be true,” the regulator adds.
The FCA reinforces a requirement which came into force on 10 January. It instructs all UK firms which offer crypto asset-related products to be registered with the FCA.
“Operating without a registration is a criminal offence,” it reminds the fintech industry.
The regulator also recently introduced a ban on the sale of crypto derivatives to retail investors.
Bitcoin dips below $33,000
Last weekend, the value of Bitcoin climbed to an all-time high of $41,973. But then on Monday, it dropped below $33,000 – briefly knocking off nearly $9,000 from its value.
At time of writing, Bitcoin’s value sat at around $35,000.
The dip follows a trend. On Sunday 3 January, Bitcoin surged above $34,000 for the first time. But its value then proceeded to drop to around $29,000 on Monday morning.
The cryptocurrency did, however, bounce back quickly.
Bitcoin hit lows of around $18,700 in early December, meaning its $41,973 high marks more than a doubling in value in less than two months.
Bitcoin delivered a more than 300% gain last year, according to Reuters. The crypto market crash has sent ripples through other crypto assets. Altcoin Ether dropped nearly 19% alongside Bitcoin.
UK consultation
In related news, the UK’s finance ministry has opened a consultation on the regulation of cryptoassets and stablecoins. Last week, Her Majesty’s (HM) Treasury released a document representing the “first stage” in the consultative process.
It seeks views on “the benefits of new technologies, supporting innovation and competition, while mitigating risks to consumers and stability”.
The document also asks participants to present evidence of wholesale uses of cryptoassets, and the “broader use of distributed ledger technology (DLT)” in markets.
John Glen, MP and economic secretary to HM Treasury, says that two years on from the launching of a government taskforce “the landscape is changing rapidly.”
He adds stablecoins could “pave the way” for faster, cheaper payments. Glen says there is increasing evidence DLT could have “significant benefits” for capital markets.
“The government is proposing an approach to cryptoasset regulation under which firm requirements are designed and implemented by the independent regulators,” the document states.
Currently, the FCA is in line as the regulator of choice for token-based cryptoasset activities. In some cases the Bank of England or the Payment Systems Regulator(PSR) may also step in.
If this consultation is put into practice, it could see a more specialised regulator take over from the FCA with regards to crypto assets in the UK.
