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Will the Bitcoin Price Rally Last This Time? - Investopedia
Will the Bitcoin Price Rally Last This Time? - Investopedia |
- Will the Bitcoin Price Rally Last This Time? - Investopedia
- Bitcoin price can hit $100,000 if BTC replicates post-March gains - Cointelegraph
- Bitcoin’s Price Is a Poor Proxy for Its Utility - CoinDesk - CoinDesk
| Will the Bitcoin Price Rally Last This Time? - Investopedia Posted: 07 Dec 2020 10:11 AM PST /Bitcoin_hires-56a01cfd5f9b58eba4af0704.jpg) The recent rally in Bitcoin price (BTCUSD) has left investors with an important question: Will the rally last? The quicksilver nature of cryptocurrency markets makes it difficult to answer that question with clarity. Bitcoin's 2017 rally transmuted into a prolonged slump less than a year later. While analysts and commentators have stepped up with optimistic predictions, it is far from certain whether Bitcoin price will continue to increase. Key Takeaways
A Trillion Dollar Target?The risky underpinnings of cryptocurrency markets will appeal to traders and investors in 2021, according to analysts from Bloomberg. "A risk-off decline like the 1Q could return Bitcoin towards the $10,000 support level in 2021, but we believe the path of least resistance remains higher," the analysts wrote. In simple words, investors will continue to embrace the risk and price volatility inherent in Bitcoin investing in 2021. Bloomberg analysts have predicted a price target of $50,000 for Bitcoin, implying a $1 trillion market cap for the cryptocurrency. They cite increased demand for the cryptocurrency, mainstream adoption and interest, and diminished supply as Bitcoin reaches its 21 million supply target as reasons for their estimated price. BTIG analyst Julian Emanuel has estimated a similar figure for the cryptocurrency's price next year. But his reasoning is different. Emanuel compared Bitcoin's price to the Nasdaq 100 (NDX), a market cap-weighted index consisting of 103 non-financial companies at Nasdaq. The index reached a peak valuation during the dotcom bubble and crashed soon after before beginning another gradual ascent. "It took NDX 14 years to rise above its parabolic 'blowoff top,' then six years to rise a further 150%. Bitcoin appears poised to exceed the 2017 parabolic 'blowoff top' in a mere three years. 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," Emanuel wrote. A New Future or a False Rally Redux?Momentum can be a powerful price propellant. The actions of a single investor can induce others, who don't know much or any better, to follow them into a trade. The price target predictions for Bitcoin bring back memories of 2017, when equally ambitious (and in some cases outlandish) predictions were made for Bitcoin's future. Back then, the cryptocurrency's astronomical prices fell as quickly as they had risen, leaving a trail of disappointed investors and shuttered investment firms. But the conditions were different. Asian investors and retail traders were reported to have driven Bitcoin's previous price increase. They quickly moved in and out of trades, booked profits, and abandoned crypto markets not soon afterward. This move sucked out much-needed liquidity from crypto markets and crashed asset prices. According to crypto-forensics firm Chainalysis, American investors driving the rally the rally this time around. Institutional firms and hedge funds, interested in parking their funds for the long term, are also beginning to pour funds into the asset class. In the long term, such liquidity should help propel future price increases because it strengthens the market and tamps down the intense volatility that has characterized crypto markets. If history is any indication, the COVID-19 pandemic may have also proven to be a turning point for cryptocurrency markets. Prominent economic historian Niall Ferguson told online publication Barron's that pandemics are accelerators of financial history. "We've seen that in just the same way that the use of coins as money was accelerated by the Black Death. Payments in kind were yielding to a cash economy in Europe, and this was accelerated in the 1340s," Ferguson said, adding that the COVID-19 pandemic has hastened the acceptance of Bitcoin as a "quasi-digital gold" among investors. Caution Is KeyThe glib utterances of analysts and Bitcoin proponents are not without their flaws, however. For example, Bloomberg analysts say that one of the reasons for Bitcoin's attraction lies in its lack of correlation to mainstream markets. But the recent whipsaw of crypto market movement has occurred in tandem with those of mainstream markets, which reached a record high the same time as Bitcoin surpassed its 2017 peak. It is important to remember that trading volumes and liquidity for cryptocurrency markets are a fraction of those for mainstream markets. There are fewer players, less transparency, and minimal regulation. And so, all price targets and analysis fall within the realm of conjectures and can change with a single large trade.  |
| Bitcoin price can hit $100,000 if BTC replicates post-March gains - Cointelegraph Posted: 07 Dec 2020 08:17 AM PST The price of Bitcoin (BTC) has quadrupled in the past nine months, which means another similar rally would put $100,000 on the table in the foreseeable future.  Dan Tapiero, co-founder of 10T Holdings, does not expect Bitcoin to hit $100,000 in the next nine months. But, he said that it shows how fast the asset is growing and its long-term potential. He wrote:
Why is Bitcoin growing so fast?Bitcoin has evolved rapidly throughout 2020 due to three factors. First, the reduction in new supply after the halving in May has evidently reduced sell pressure. Second, the increase in institutional demand has caused the buy-side pressure for BTC to rise considerably. Third, long-time BTC holders have continued to express confidence, boosting market sentiment. For institutions, the sudden drop of Bitcoin to sub-$4,000 in early 2020 was also a compelling entry point. It was one of the worst-performing assets during the pandemic-induced crash in March, dropping by around 50% to as low as $3,596 on BitMEX. Since then, Bitcoin has shown resilience and staying power, eventually recovering back to its all-time high and reaching a new record high above $19,982 on Coinbase on Dec. 1.
At the same time, investors such as MicroStrategy CEO Michael Saylor believe BTC is in a much stronger position now compared with the previous bull cycle. For one, today's retail interest is only a fraction of what it was during peak euphoria in December 2017. Moreover, the increasing perception of Bitcoin as a digital store of value and a must-have in every portfolio has boosted its brand image among big investors alongside record institutional inflows. All of this raises the possibility of a six-figure price tag as early as next year. Some analysts have even predicted $200,000 and higher by December 2021. "Digital gold"Since it's often dubbed as "digital gold," one of the strong bull cases for Bitcoin is closing its valuation gap with the precious metal. At $9 trillion, Bitcoin's $300 billion market cap is just 3% of gold. BTC hitting $100,000 would reduce this gap to 23%. The value of Bitcoin has risen 100% against gold since September, with 1 BTC now buying over 10 ounces of gold. At the same time, analysts have noted record outflows from the gold market in recent months, some of which have ended up in Bitcoin.  As Cointelegraph reported, the U.S. dollar may weaken further in 2021, something that has traditionally buoyed both Bitcoin and gold.  |
| Bitcoin’s Price Is a Poor Proxy for Its Utility - CoinDesk - CoinDesk Posted: 03 Dec 2020 05:02 AM PST I have looked on with interest over the past two months as bitcoin has climbed to approach its previous all-time high. That old high-water mark occurred in the midst of hysteria. The price action of the time, three years ago, can only be described as mania. It was, to use the Gartner Hype Cycle language, the "Peak of Inflated Expectations." In financial terms, it was a bubble. This rally is different. This time has not been marked by a wild influx of speculative investors. We have not seen the long-tail of tokens pump to dizzying and inexplicable heights. Google Trends show searches for "bitcoin" have been hovering below 20% of the peak popularity the search achieved three years ago. This rally has been quiet, focused and therefore particularly striking in its magnitude. Have we reached the "Slope of Enlightenment" part of the cycle? Or perhaps the "Plateau of Productivity?"
There is a tendency among those of us who work in cryptocurrency to associate the Hype Cycle chart with bitcoin's price graph. Gartner's Hype Cycle, however, is not about price. It is about maturity and adoption of new products: whether and how emerging technologies are solving real problems. Just because the price is appreciating does not mean crypto is providing utility to people. And just because, this time, the price appreciation is not accompanied by hype does not mean it is founded on real substance. With bitcoin's silent, steady advancement towards $20,000, it is tempting to believe we have made it, that crypto is now the foregone conclusion that so many of us have expected it to be for years. It feels like, after years of seemingly Sisyphean toil, the industry is bringing its purpose to bear. But if we are to say that we have "made it," we must first answer the question: where are we going? What is the goal? "We are going to the moon!" echoes the refrain of bitcoiners. It is telling that the closest thing we can get to naming a common goal has only to do with price. Price, though, is not an end unto itself and speculation is not a use case. 
Blind menBeyond price appreciation the industry agrees on very little. Crypto has always reminded me of the parable of the blind men and the elephant. Several blind men come upon an elephant and as each touches a different part of the animal – the trunk, the legs, the tail, the side – he believes it to be something different – a hose, a tree, a rope, a wall. So it is with cryptocurrencies and blockchain technology. These products promise something different to everyone who encounters them. To some, crypto is about scarcity: a form of digital gold. To others, crypto is about openness: the ability for anyone to build on and contribute to and use these products without permission. For others still, it's censorship resistance. Privacy. Micropayments. Global, cross-border assets. All of us blind men are holding onto a separate feature of the technology and insisting it represents something different.
Until we have more agreement on what it is we have in front of us, it will be very difficult for the industry to have a common goal besides the moon. Will we agree that we have made it when bitcoin eclipses gold? Or when it becomes perfectly correlated with gold? When every remittance corridor runs on crypto rails? When every web app we use runs on decentralized infrastructure? Will we have made it when fiat money is eradicated? Or when central bank digital currencies have taken over? When the institutions come into bitcoin? Or when the institutions are defunct? With questions like these outstanding, it is little wonder that the only goal we can all agree on is that the price go higher. While the price is appreciating right now, I do not believe we can credibly say that we have found our way up Gartner's "Slope of Enlightenment." Price is often a poor proxy for utility. Real use of cryptocurrency products and applications remains limited. Decentralized finance products have seen under 1 million unique users. Web3 technology remains in its infancy. Only about 2,500 merchants accept bitcoin in the United States. Adoption is trending the right direction, but it is still early.
OptimismThis may sound pessimistic, but I actually believe this is all cause for confidence. First, if we are all blind men clutching at an elephant, that is a strength of the space. It means that experimentation continues across a multitude of use cases. I believe the diverse nature of the work happening across the industry means we are more likely to get it right and discover the technology's killer applications. And if what you are worried about is price, then I think you should also take heart here. If bitcoin can sustain these prices now, even in its state of relative immaturity, then consider the heights it may achieve when crypto actually finds full product-market fit. I am also optimistic about many of the products emerging that are focused on onboarding new users and driving actual participation and use as opposed to pure speculation. Companies like Fold and Lolli are doing this by using bitcoin as a reward for users. Products like Linen are pulling in mainstream users by offering them real utility in the form of high-interest dollar savings. Projects like RabbitHole are explicitly focused on teaching and incentivizing new users of protocols. Crypto prices may be a little ahead of real use and adoption right now, but the industry is working towards rapidly catching up. Finally, there is one exception in all this. There is one area in which crypto adoption seems to have reached a reasonable level of maturity. I maintain that speculation is not a real use case. Holding, however, can offer utility. Bitcoin offers a hedge against inflation and uncertainty. This use case demands only a secure custody solution (and a viable regulatory and compliance framework). It is no wonder that this would become the first use of cryptocurrency to reach maturity. And it seems that this is happening. Corporates like Square and MicroStrategy buying up bitcoin are examples of this. Financiers like Paul Tudor Jones and long-time bull Abby Johnson are further proof points. Bitcoin, as digital gold, leads the charge for crypto into widespread adoption. The other promises of cryptocurrency, meanwhile, have yet to mature and make their way into the mainstream. Prices will never be the best proxy, but they will remain in the spotlight. Disclosure  |
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