Predictions are a thankless task, but taking into account different opinions and assessments allows us to look at the situation from the outside and take a larger movement than was the original calculation. Estimates of Bitcoin’s future include both sharply optimistic and pessimistic forecasts. Let’s try to structure them and determine will Bitcoin fail or not.
The rise of Bitcoin is only a symptom of a common problem. Social inequality in the 21st century has gotten even worse, and the value of U.S. financial assets is six times the size of GDP. When the tipping point is reached, there will be a burst, and the Bitcoin bubble will burst. That sounds ominous, but that’s roughly what was predicted for the cryptocurrency in 2017. At the time, it was compared to the seventeenth-century tulip fever in Holland. However, the forecast for Bitcoin did not come true: three years later, it had already updated the ATH (absolute maximum).
Major falls for bitcoin are not uncommon: in 2011 the price fell from $32 to $2, and in 2014 from $1,000 to $170. Nevertheless, patient investors made super profits as the price inevitably rose well above the previous ATN. Predictions of bitcoin’s decline vary widely. Investment director Guggenheim Partners believes that Bitcoin has already peaked in 2021 and is now expected to correct to the $20,000 level. However, if you draw historical parallels, the fall could also happen to $4,000. But the likelihood of such a decline is small.
As Bitcoin’s value grows, so does the number of participants, which makes the system more stable and the price less volatile. The year 2020 saw the arrival of institutional players. They are distinguished by their long-term planning against the actions of small speculators, who close purchases at the first danger. Thus, the number of wallets with $1,000 BTC or more continues to grow despite the drop in value from $42,000 to $30,000.
Institutional investors, we have found, are fleeing real inflation, which has yet to fully manifest itself. Meanwhile, Biden plans to launch a new $1.9 trillion anti-covid plan. The FED will have to once again issue cash in exchange for government bonds. The regulator’s balance sheet has already doubled in weight in 2020 – isn’t that a bubble?
If Bitcoin is seen by most institutional investors as a safe harbor from inflation, the new U.S. stimulus measures will reignite interest in cryptocurrencies. The current price decline has not stopped big money flowing into cryptocurrencies, and a 30% correction should be treated as commonplace if we’re talking about highly volatile Bitcoin.
The psychologically important marks of recent years for Bitcoin are price moves in multiples of $20,000, this brings us to the $60,000+ mark should Congress approve the $1.9 trillion anti-covid plan. Much, if not all, will depend on the attitude of leading regulators towards digital assets. At the moment, they are taking a rather neutral stance. That opens up the possibility of long-term planning.