Opinion: Bitcoin could be worth $115 000 by the end of the year

18.02.2021 |

For an article about the value of bitcoin by the end of 2021

The price of bitcoin against the dollar on online exchanges has crossed the threshold of $52 000, and the total capitalization of the cryptocurrency market exceeded $1.5 trillion. And, although it was not possible to consolidate above this mark, prices continue to rotate around this limit.

Fundamental reasons for growth

If previously it was possible to talk about the speculative nature of bitcoin price growth caused by psychological reasons of buyers who trusted the opinion of billionaire Elon Musk, the last two rises are due to purely fundamental reasons — increased demand from large companies that are not directly related to the cryptocurrency industry.

First, Tesla acquired a digital asset worth $1 500 000 000. And now analytics software developer and provider Microstrategy has announced it is raising funds through convertible notes, which it plans to invest entirely in buying bitcoin.

Originally planned to raise $600 million through a bond offering maturing in seven years. However, after the bitcoin price surged above $50 000, the company said it would increase the amount by $300 million, reserving the right to redeem an additional $150 000 000. All securities issued will be convertible into cash and common Class A shares. Coupon payments on the bonds are planned to be paid every six months.

Thus, despite the statement of many cryptoskeptics that the price of the first cryptocurrency is purely speculative in nature, the given examples show the opposite.

In the next six months, the volatility of the first cryptocurrency will decrease

Large fluctuations in prices on online exchanges are caused primarily by retail investors and short-term traders. To stabilize the price it is necessary that the share of these market players in the total volume decreases. It can be achieved within the next six months. The increasing interest from large companies will help to decrease the volatility. And, as can be seen from the fundamental analysis, more and more corporations not related to the crypto industry are investing free liquidity in the digital asset.

Institutional investors will transfer bitcoin from exchanges to their own wallets for cold storage after purchase. Therefore, the supply of cryptocurrency will decrease, the price will increase, and the relative volatility will decrease accordingly. And the big players are not risk averse, and their volumes can significantly affect the price.

Bitcoin may rise above $100 000 by the end of the year

The same reasons that will cause the market to stabilize. Specifically:

  • demand from large companies,

  • transfer of most of the liquidity to cold wallets,

  • steady interest in the cryptocurrency from the speculators.

All of this will lead to an increase in the price of the first cryptocurrency against the U.S. dollar this year. Head of hedge fund Pantera Capital Dan Morehead says about at least another twofold increase in quotations from the current figures.

Some experts suggest that the current situation in the crypto market is a classic implementation of the “pump and dump” scheme implemented during 2017-2018. Except that the current state of the situation has one difference, which will not let the cryptocurrency market collapse. And that is, as mentioned earlier, large, long-term investors. If in the past, during the reset, the players were mostly retail traders, unable to “absorb” a large volume of supply at one time, now the institutions easily absorb almost any volume, without a significant reflection on the current rates.