Bitcoin is closing in on an all-time high, and some think it could go much
The digital currency is trading at around US$18,200, levels not seen since December 2017, however, it has been estimated that the price could be as high as US$318,000 by the end of 2021
The price of Bitcoin, the original cryptocurrency, has reached a value of around US$18,200 as of lunchtime trading on Wednesday, levels not seen since December 2017 and with many expecting that it will push higher still.
Bitcoin has been the beneficiary of a flurry of investor activity as the pandemic and subsequent economic and market volatility had led many to reassess their view of the digital currency as a better store of value. In short, Bitcoin is being increasingly seen as something of a haven asset akin to gold, which also tends to rise in price amid volatility in the equity markets.
The crypto is currently up around 150% so far this year, with a 60% rise in August alone, however, investors have seen this before, in 2017, when a similar surge in the price of Bitcoin was accompanied by a flash crash that it has taken almost three years to recover from.
“Investors now need to decide whether Bitcoin is again going to come down like a stick, having gone up like a rocket, or whether it will just keep on going – and going and going”, said AJ Bell’s Russ Mould
The investment director said that if the first surge in Bitcoin was down to early adopters and “true believers” in blockchain and cryptocurrency technology and the second rise due to speculation, this third wave is possible a result of “greater corporate and institutional interest” in the digital currency.
“Starbuck’s has run trials to accept Bitcoin, Jack Dorsey’s payments company Square has purchased Bitcoin and America’s Greyscale Bitcoin Trust continues to grow its assets and therefore acquire more Bitcoin”, Mould added.
Price could hit US$318,000 next year
While surpassing US$18,000 again is a huge milestone for Bitcoin, an analyst at Citibank has forecast that the cryptocurrency could hit US$318,000 by December 2021.
In a report leaked over last weekend, Thomas Fitzpatrick, head of the bank’s CitiFXTechnicals market insight product, said that a decoupling of gold from national fiat currencies in addition to the effects of the coronavirus pandemic and heavy quantitative easing from central banks could result in rapid price rises for Bitcoin.
The report also highlighted that Bitcoin is not subject to many of the restrictions the afflict gold as a haven asset, notably storage and its non-portable nature.
However, Fitzpatrick said that the rising popularity of Bitcoin will also serve to attract more scrutiny of national regulators, which may stymie the ability of large payments firms or institutions from adopting cryptocurrency effectively.
Mould concurred on the risk of regulation, saying that central banks such as the Federal Reserve, the and the European Central Bank could “Push back, deploying either their own, official digital currencies…or simply try to ban Bitcoin”.
Read More: Bitcoin is closing in on an all-time high, and some think it could go much