Bitcoin is headed for the moon — how far will it go?

2020 saw Bitcoin jump 150%, more than any other asset class. Why did this happen, and what will Bitcoin do in 2021?

Overall, 2020 was an interesting year for the markets, in which Bitcoin stood out. The decentralised cryptoasset jumped more than 150%, more than any stock market index or gold, and its rise has only accelerated in recent weeks.

Bitcoin reached several new audiences during 2020, from Wall Street enterprises to young investors, and it’s likely we can expect continued success in 2021.

 

 

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Wall Street Gets Bitcoin Positive

Investors large and small have entered the crypto arena during 2020, bringing an unprecedented streak of excellent news for Bitcoin. Contrary to previous periods of Bitcoin prosperity, we are seeing less hype and far more significant developments:

  • American software company Microstrategy made history this summer when it invested $425 million in Bitcoin. CEO Michael Saylor said: “[The investment] reflects our belief that Bitcoin is a dependable store of value and an attractive investment asset with more long-term appreciation potential than holding cash.”
  • Payments giant Paypal gave Bitcoin tremendous recognition, making it accessible to its 300M users.
  • Greyscale: The biggest Bitcoin trust is offering average investors easy access to Bitcoin. Over the last quarter, Greyscale added $1B to its assets, which totals $7 billion of Bitcoin-backed assets.

 

 

The purchase of real cryptoassets is an unregulated service in most EU countries and is not covered by any specific UK regulatory framework/protection. Your capital is at risk.
AFSL 491139. CFDs are highly leveraged and risky, and may not be suitable for all investors. You may lose more than your initial investment.

Influx of Small Investors

Bitcoin is expanding in Wall Street. According to the Bitcoin Treasuries report, investments of publicly traded and private large firms have reached a record 840,000 coins, worth approximately $15B. Billionaire Stanley Druckenmiller, chief strategist to legendary investor George Soros, also recently revealed that he owns Bitcoin.

A further example of Wall Street Bitcoin-positivity is Fidelity, one of the largest financial services corporations in the world, which launched a Bitcoin fund for accredited investors in August. In a letter to its investors, Fidelity recommended Bitcoin as a diversification to investment portfolio and calculated that it has a notable positive impact on returns.

Higher demand, lower supply

May saw the Bitcoin Halving, where Bitcoin supply decreased, with the number of new Bitcoins dropping from 1800 to 900 coins per day. The impact of halving can be seen in this analysis by Pantera Capital; plus Square and PayPal together already cover more than 100% of new Bitcoins. As their Bitcoin businesses are expected to grow, the pressure of demand for the limited supply of Bitcoin will increase.

New Highs

The question is, what can we expect?

Previously, when Bitcoin set a new all-time high following a continued downtrend, it ignited a massive rally. This pattern presented with an upswing of more than 3800% in 2013, and a further rally of around 1900% in 2017.

Known Bitcoin investors such as Anthony Pompliano, who predicts that the price of Bitcoin will reach $400,000, and the Winklevoss brothers, with their prediction of $500,000, seem to expect this pattern to repeat itself. Sharing this view are several other financial pundits, such as Citi, who predict that Bitcoin’s price will reach $318,000 by as early as the end of 2021, plus Bloomberg intelligence, who forecast $100,000, and JPMorgan, who anticipate $39,000.

Although the end results are not clear, what is clear is that many are in agreement that it is not too late to act.

 

 

The purchase of real cryptoassets is an unregulated service in most EU countries and is not covered by any specific UK regulatory framework/protection. Your capital is at risk.
AFSL 491139. CFDs are highly leveraged and risky, and may not be suitable for all investors. You may lose more than your initial investment.
This communication is for information and education purposes only and should not be taken as investment advice, a personal recommendation, or an offer of, or solicitation to buy or sell, any financial instruments. This material has been prepared without taking into account any particular recipient’s investment objectives or financial situation, and has not been prepared in accordance with the legal and regulatory requirements to promote independent research. Any references to past or future performance of a financial instrument, index or a packaged investment product are not, and should not be taken as, a reliable indicator of future results. eToro makes no representation and assumes no liability as to the accuracy or completeness of the content of this publication.

 

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