Bitcoin price has had a blockbuster 2020 and 2021, despite the recent drop. Since the beginning of 2020, the Bitcoin price was hovering around $7,500. At the beginning of 2020, BTC was priced around $7,500. Since then, BTC jumped by around 7,733.33% and reached an all-time high of $65,000 in mid-April. Since then, the premier cryptocurrency has calmed down and is presently priced at $58,600. So, have we reached the peak, or does Bitcoin still have ways to go by the time 2021 ends? Let’s take a look.
Quick Summary For Fast Readers
- Bitcoin reached an all-time high of $64,863.10 in mid-April.
- The fact that institutions, banks, ETFs are rushing into BTC is a very bullish signal.
- On the flipside, the lack of regulation and use cases and the burgeoning altcoin market could affect BTC’s growth.
- Experts believe that Bitcoin price will reach six figures by the end of 2021.
Factors why Bitcoin will keep rising
#1 Institutions are only getting started
Let’s start with the biggest factor. Institutions have fallen in love with Bitcoin. MicroStrategy and Tesla have purchased billions of dollars worth of Bitcoin. In fact, MicroStrategy CEO Michael Saylor has become somewhat of a Bitcoin poster boy. Along with this, Mogo, Meitu, Square, Nexon, etc., have all made significant investments in Bitcoin as a hedge against financial risks and fluctuations. As things stand, institutions are constantly looking for significant price drops to step in to bolster their holdings for cheap.
#2 ETFs coming in
Over the last few months, Canada, Chile, Brazil have all greenlit Bitcoin ETFs. In fact, Canada has greenlit two Bitcoin ETFs, wherein the first one ended up earning >$800 million within three weeks. As of now, the US SEC is supervising multiple ETF applications from the likes of Skybridge Capital, Fidelity, Goldman Sachs, Van Eck, etc.
Now, why is this such a major thing?
The chart above was shared by CryptoQuant fonder Ki-Young Ju. According to him, the NYSE listed the first gold ETF in November 2004.
“NYSE listed the first gold ETF in Nov 2004, and the price never came back. Many economic factors have affected the gold price, but listing ETF would have played a major role in the inflow of global institutional funds.”
Since then, the price has gone up exponentially and has never come down to pre-ETF levels. Bitcoin ETFs could have a similar effect on BTC price, as well.
#3 Big banks have entered the fray
Following years of indecision and negativity, it seems like Wall Street has finally warmed up to Bitcoin. The likes of Goldman Sachs, Morgan Stanley, BNY Mellon, State Street, Deutsche Bank, Citibank, etc have all been positive about BTC. In fact, Goldman Sachs has gone a step further and submitted an application for a Bitcoin ETF and launching a cryptocurrency trading desk.
#4 Supply scarcity
Finally, we have a supply issue. As you may already know, Bitcoin has an upper cap of 21 million, of which 18.7 million have already been mined out. The 2020 Bitcoin halving also halved the block reward from 12.5 to 6.25 BTC. this halving will happen every four years, driving down the supply even more. So, let’s think of it like this. Bitcoin’s demand is higher now than it has ever been with institutions flowing in. However, there isn’t enough supply to satisfy this unprecedented demand. In other words, the demand goes higher than it has ever been.
Factors why the Bitcoin price could fall or even crash
#1 It is altcoin season
Bitcoin market dominance has dropped to 44% for the first time since 2018. This tells us that the rest of the market is starting to lay its claim on the crypto ecosystem. With DeFi becoming bigger than ever before, the market has begun investing in DeFi platforms – with Ethereum and Cardano hitting all-time highs- DeFi oracles – like Chainlink – and DeFi tokens – like Compound, Maker, etc. So, what this tells us is that the market is getting increasingly more interested in looking at life beyond Bitcoin.
#2 Regulations are going to get more hardcore
With cryptocurrencies becoming bigger and mainstream than ever before, countries and central banks will rush in to impose more restrictions than ever before. JP Morgan CEO Jamie Dimon recently pointed out that the U.S. could impose more restrictions on the BTC market. Of course, let’s not forget about the Indian government’s repeated flirtations with crypto bans.
#3 Lack of use cases
The reason why Ethereum has such a fantastic potential is its sheer diversity in use cases. Ethereum is – a mode of payment, a store-of-value, a platform supporting a $75 billion DeFi ecosystem, the platform that allows everyday folks to create NFTs, etc. However, what is Bitcoin’s use case? Its lack of scalability makes it a failure when it comes to being a mode of payment. So, as of now, Bitcoin’s use case is nothing but a store-of-value. Can this lack of use case decrease its overall utility and make it less valuable in the long run?
What price will Bitcoin reach in 2021?
Alright, let’s analyze Bitcoin’s price closely with technical analysis. Firstly, we will be looking at the monthly BTC price chart. Bitcoin has had six straight bullish months between October 2020 and March 2021, wherein it jumped from $10500 to ~$59,000. That’s a >460% increase in valuation. However, the bears have taken control since then. The relative strength index (RSI) shows that the asset is presently overpriced, so a further correction is likely in the cards.
Now, when you see the daily Bitcoin price chart, BTC is trending between really strong levels, with the $59,000 resistance barrier on the upside and the 50-day SMA on the downside. If the sellers somehow manage to flip the 50-day SMA from support to resistance, it will drop further to the 20-day SMA($55,000). The Bollinger Band has started expanding, which indicates that volatility is on the rise and a further drop is in the cards.
As things stand, the Bitcoin price will drop to either $55,000 or even $50,000 before it rises up once again. Upon breaking past the $60,000 psychological level, it will reach newer heights and break past the $70,000 psychological level.
Opinions of successful people
#1 Thomas Fitzpatrick – $318,000 (by 2022)
Citibank’s Thomas Fitzpatrick is super bullish on Bitcoin as per a report that leaked in 2020. According to him, BTC will reach $318,000 by 2022. He drew his conclusions by analyzing the gold marker of the 1970’s.
#2 Winklevoss Twins – $500,000 (by 2030)
Tyler and Cameron Winklevoss, the billionaire twins and founders of Gemini believe that Bitcoin can reach $500,000 by 2030, making its market cap the same as that of gold (around $9 trillion). According to Tyler Winklevoss:
“Our thesis is that bitcoin is gold 2.0, that it will disrupt gold, and if it does that, it has to have a market cap of 9 trillion, so we think it could price one day at $US500,000 of bitcoin.”
#3 Anthony Pompliano – $250,000 (by 2022)
The founder and partner at Morgan Creek Digital and one of the most well-known people in the Bitcoin ecosystem – Anthony “Pomp” Pompliano – predicts that BTC will hit $100,000 by December 2021. Since then, he has revised this number to $250,000. The Pomp is an ardent believer in BTC and holds more than 50% of his net worth in the premier cryptocurrency.
Pompliano believes that Bitcoin’s supply is much less than what is perceived by most, which is in stark contrast to the demand. Also, Pompliano refers to the US Federal Reserve’s less than ideal financial policies as another reason for investors flocking into safe-haven assets like Bitcoin.
Bitcoin has proved its credibility as a safe-haven, store-of-value during the pandemic. Now with institutions flowing in by the droves, it is time for Bitcoin to prove its standing as one of the world’s leading asset classes. A lot of investors are hoping for BTC to reach 6 figures this year. Let’s see if such an overtly bullish outlook gets validated or not.