The value of the most popular cryptocurrency this year jumped 160 percent and is close to a record.
The renaissance that bitcoin is experiencing this year could continue next, so some experts in the cryptocurrency market point out that in 2021, the most popular digital currency could reach a value between $ 100,000 and even a hard-to-imagine $ 300,000. Skeptics who see cryptocurrencies as speculative assets rather than a kind of digital substitute for gold have been denied by this year's uncertainty in financial markets caused by the coronavirus pandemic.
Growth by five times
During 2020, the value of bitcoin jumped more than 160 percent and is now close to the record value from the end of 2017 of just under $ 20,000. Namely, bitcoin was traded at $ 18,980 at around 1 pm yesterday, which is 1.6 percent higher than the day before, according to CoinMarketCap. According to Reuters, a big boost to the value jump this year came from institutional investors, meaning bitcoin is increasingly entering traditional financial flows.
But it should not be overlooked that digital payment services, such as PayPal and Square, allow trading in this cryptocurrency. Given the experience so far in price movements, it’s not impossible to see growth from $ 18,000 all the way up to $ 100,000 next year, says Brian Estes, chief investment officer at the hedge fund Off the Chain Capital. "I saw bitcoin grow 10, 20, 30 times a year. Therefore, increasing the value by five times for bitcoin is not a big deal, "Estes told Reuters. Moreover, Estes estimates that the price of bitcoin could range between $ 100,000 and as much as $ 288,000 by the end of next year, based on the model used to forecast commodity price movements, such as gold. The accuracy of that model correlates 94 percent with the movement of bitcoin values, Estes says.
If inflation is taken into account, the current value of bitcoin has already surpassed the former record, entrepreneur Hrvoje Prpić, the most well-known investor in cryptocurrencies in the domestic public, told Poslovni dnevnik. "It is difficult to assess exactly what reasons led to this year's jump in the price of bitcoin. It is also possible that part of the capital fleeing the uncertainty caused by the corona crisis has spilled over into cryptocurrencies. In addition, given that there is an abundance of money on the market, it is also possible that large investment funds have discovered cryptocurrencies. It should be emphasized that bitcoin, by approaching the former record value, becomes attractive to the general population, so I see the reasons for the increased demand here as well ", Prpić points out. He says he expected the value of bitcoin to recover to former levels, but adds that he could not estimate when exactly this will happen. "But I still keep my portfolio, and I intend to sell half of it when the price reaches $ 50,000," reveals Prpić.
Hysteria modeling
When asked how he comments on the estimate of the value of bitcoin of 100,000 dollars, Prpić said that there are many estimates of how much value that cryptocurrency could reach next year. "If the price breaks above $ 20,000, I expect a significant jump," Prpic said.
Tom Fitzpatrick, a technical analyst at US bank Citigroup, said in an analysis last week that sbitcoin could fetch $ 318,000 by the end of next year. He cited limited supply, facilitated cross-border capital movements and a wider investor base as reasons for such an optimistic assessment. The figures the financiers are throwing in do not impress Canadian independent analyst Kevin Muir at all.
"Every valuation model used by hedge funds is rubbish. You can't model the market hysteria ", emphasizes Muir, adding that there is no chance that anyone knows in which direction the crypto market will move in the near future. The scale of bitcoin's popularity among large investors is evidenced by the fact that the benchmark that tracks the number of digital wallets with at least 1,000 bitcoins is at the highest level ever, says Phill Bonello, research director at digital asset management company Grayscale. Bonello says more than 2,200 wallets are linked to large bitcoin investors, as opposed to the 1,600 they were two years ago. In this context, this is a major change given that the past rise in prices was driven mainly by small investors. Although they are in the background, prices are in the background, analysts believe that this will change with the entry of Square and PayPal into the crypto market. In that case, the demand of small investors will be more intense than in 2017.
