Bitcoin Will Reach 70K by 2021
Bitcoin is witnessing one of the most glorious bull runs in its more than a decade old history. It is currently trading at above 23,000 US dollars. Some experts believe that the price of Bitcoin may go well up to 70,000 US dollars and beyond in 2021. Before delving deeper into such price speculations, let’s have a look at the drivers fueling this astounding growth in Bitcoin’s prices.
The fundamentals of Bitcoin are stronger than any other cryptocurrency in the market. Not only, it is the oldest player in the crypto market, but more than half of the global market capitalization of cryptocurrencies also comes from Bitcoin alone. While the global crypto market cap is hovering a little over 650 billion US dollars at present, the market cap of Bitcoin alone is over 430 billion US dollars. It is indicative of Bitcoin’s spread and reputation worldwide. New investors joining the crypto market invariably try to leverage the potential of Bitcoin.
Large scale traditional payment services providers have been joining the crypto bandwagon for quite some time now. In October 2020, Paypal made public its decision to become a crypto payment services provider. It announced that it would provide services relating to the buying, selling, and holding of cryptocurrencies through their user accounts. This decision of Paypal will benefit many cryptocurrencies. But Bitcoin is poised to make the most out of this collaboration. The already widespread influence of Bitcoin in the crypto market will amplify manifolds.
So, what is the huge deal about PayPal’s decision to become a crypto payment service provider? The reason is obvious! PayPal has 26 million registered merchants under its wing. Other than PayPal, the fast-growing trading applications, such as Robinhood and Square, have also collaborated with crypto assets. As the largest player in the market, Bitcoin will gain the maximum leverage from these collaborations.
In another significant development, Mastercard, one of the largest payment facilitators in the world, started a crypto card partner program. The program will run in partnership with Wirex. The users of these crypto cards will receive 1.5% back in Bitcoin through its Crypto back rewards program. Such institutional collaborations generate confidence among traditional investors, who feel confident to go with Bitcoin whenever planning to invest in Cryptocurrency.
According to many experts, one of the primary drivers enabling Bitcoin to grow at this pace is its third halving. In the crypto world, halving refers to the process of cutting down the number of coins that miners receive for adding new transactions to the blockchain being cut in half. In May 2020, Bitcoin implemented the third halving in its lifetime. For Bitcoin, halving happens every four years. As usual, the number of daily bitcoins mined got reduced by half. People who know the crypto market well know that the event of halving is directly connected to the exponential rise in the Bitcoin market cap and overall capitalization of the cryptocurrency in the global market. This time was no exception as well.
Accumulation by Whales
In the crypto market, individual investors or institutional entities holding large coin-volumes for a long period are called whales. These are entities who have the power to manipulate the price. The rise in prices of Bitcoin is seen by many experts as a direct outcome of bitcoin accumulation by these whales. According to the latest research estimates published, there are currently 114 such large Bitcoin hoarders who have accumulated 10,000 bitcoins or more.
Increased Interest from Institutional Investors
Institutional investors are becoming increasingly interested to invest in bitcoins. Apart from payment services collaborating in a big way, traditional financial institutions are also keen to provide crypto services. One such example is JP Morgan Chase. JPMC has decided to initiate blockchain-based interbank payment systems leveraging stablecoins. Such moves make investors more confident about the crypto market and, as its largest player, Bitcoin gains the maximum benefits. The involvement of the institutions is also making the millennials more excited about the prospects of Bitcoin. Some reports suggest that millennials treat Bitcoin as digital gold, which they prefer to hold as a long-term high-return asset.
With all these factors in place and the Federal Reserve’s massive money printing exercises ongoing, market experts believe that the upsurge in Bitcoin will continue in the days to come. Price prediction models based on the stock to flow analysis method suggests that a ferocious bull run will continue driving Bitcoin towards newer heights. This stock to flow analysis, taking a cue from Bitcoin’s earlier histories of halving, suggests that the price of Bitcoin may reach the mark of 70,000 US dollars by the middle of 2021.
The outbreak of the COVID-19 pandemic and the economic slowdown induced by it has forced the Federal Reserve to print $22 million of new paper currencies per minute. Such large scale currency printing invariably corrupts the currency, and there are high chances that returns from traditional investments will reduce at a significant scale. Anticipating such a scenario, experts believe, that investors will continue to put their money in digital currencies. Bitcoin being the topmost contender among all digital currencies available in the market, there is no reason to disbelieve in the future potential of Bitcoin.
Despite all these positives on Bitcoin’s side, the trends of price volatility in the world of crypto suggest that one should trade cautiously. No one is sure enough to make speculations in the short-term. Therefore, the smart investment strategy would be cost-averaging for the long run. Interested investors can keep on buying small amounts of Bitcoin on a daily or weekly basis and hold it for the long run, in terms of years. Such a sustained involvement will help make the most out of the new heights Bitcoin will scale.