The bitcoin price has risen about 300 percent over the past twelve months thanks to mainstream adoption and institutional interest. It rose sharply to its highest high of $ 41,000. At the time of this writing, the price is around $ 35,000 and it will be interesting to see the reactions and pricing behavior of traders for the rest of 2021.
The Bull Run is likely to continue
The bull cycle of Bitcoin is likely to continue, especially in the second half of 2021. One of the causes of price increase is the widespread acceptance. Currently, relatively few people accept and use Bitcoin in everyday life. However, we may see mainstream acceptance in the coming months. For example, PayPal has allowed users to buy and sell bitcoin using PayPal accounts. Square also invested $ 50 million in bitcoin. Continuous adoption like this can significantly increase the price of bitcoin.
The liquidity in bitcoin was a sign that more institutional bodies were on the agenda. Similarly, institutional interest is expected to increase the prices of bitcoin and other cryptocurrencies during 2021.
In another sign of the general growth of cryptocurrencies expected in 2021, the major cryptocurrency exchange Coinbase is expected to become a listed company this year. The institutional assets of the exchange increased from $ 6 billion to a whopping $ 20 billion between April and November 2020.
Due to the cyclical bear market of the US dollar and global liquidity, bitcoin will benefit significantly from people hedging against inflation. Many retailers will also step in due to the fear of missing out (FOMO), which pushes the price further. Traders who do not want to invest directly in bitcoin will trade contracts for difference (CFDs) on bitcoin via forex brokers and trading platforms.
Institutional interest
As mentioned above, PayPal announced in October 2020 that it would support the buying and selling of cryptocurrency. Other institutions and Wall Street giants have also shown interest in cryptocurrency. JPMorgan Chase & Co. and Citibank, for example, predicts a bullish bitcoin market. According to a leaked report from Citibank, analysts refer to bitcoin as 21st century gold that predicts it could reach $ 318,000 by the end of 2021. Will Woo, a former partner of Adaptive Capital, also referred to $ 200,000 as a conservative prize.
A note to institutional clients from Tom Fitzpatrick, the world head of CITIFX, leaked on Twitter. The note showed a chart of three bitcoin bulls in the past decade. He suggested that the bitcoin rally could peak at $ 318,000 in December 2021. However, other analysts such as BTIG and Bloomberg are more conservative and predict that the price will reach $ 50,000.
Fiscal fiscal and monetary policy
Fiscal policy and monetary policy that wants to devalue currency will work in favor of the bitcoin price. Much of the demand comes from investors who fear that the pressure of money will devalue conventional money. With fiat money out of control, bitcoin is seen as a fixed asset, just like gold.
In addition to a weak monetary policy, the dollar could also be greatly affected by the COVID-19 vaccination. For these reasons, the demand for bitcoin can increase significantly.
Withdrawal can happen
Although proponents of cryptocurrency are exuberant, there is a possibility that bitcoin prices will not rise as the highest point set in 2020. 2017 rally. Some believe that the only time bitcoin is likely to reach another significant peak, in 2024, after halving the next mining subsidy.
The popularity of Bitcoin as digital gold is spreading fast. Unlike gold, however, bitcoin is experiencing its first global crisis, caused by COVID-19, as it was born in 2009 after the financial recession in 2008. In 2020, investors sold shares for cash. Even gold, considered by many to be a safer investment than bitcoin, dipped in March. Bitcoin also crashed sharply in mid-March, but the bitcoin business was different. The cryptocurrency bounced from the bottom up a month later in a bull run that lasted until the end of the year.
Regulators
Regulators have been researching digital currencies for years. Some people, though only a few, use cryptocurrencies to engage in illegal activities, and with the rising value of cryptocurrencies, governments around the world will take a closer look at the market. For example, a lawsuit by the US Securities and Exchange Commission (SEC) against altcoin project Ripple dropped XRP prices by almost half.
Regulatory agencies may suddenly create an obstacle to taming unscrupulous activities around bitcoin, but this regulation may not significantly affect the bullish run of bitcoin.
Central Bank and Big Tech Competition
Transactions involving various fiat currencies can take days and involve large fees, and a global digital currency could significantly streamline this process in 2021. While the adoption of bitcoin is growing, the cryptocurrency may experience competition to solve the problem of big technology. A good example is the digital currency of Facebook, and although Facebook diem is completely different from Bitcoin, in 2021 it may attract some attention from bitcoin.
Central banks are also competing against bitcoin. As reported by Banks for International Settlements, 80 percent of central banks are on the verge of developing some form of digital currency. China, for example, is working on adopting a digital yuan. In many critical ways, this central bank’s digital currencies will be completely different from bitcoin.
Closure
In general, the adjustment of bitcoin in trade is a perfect cause for price increases in 2021. Although the price and adoption of bitcoin is expected to increase, we can not rule out the opposite, and volatility is certainly possible.
This is a guest post by Michael. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.
