12:50Bitcoin Investment In 2021: What Should We Expect?
The bitcoin price has surged about 300 percent over the last 12 months thanks to mainstream adoption and institutional interest. It has rallied massively to surpassing all-time highs of $41,000. At the time of this writing, the price is hovering around $35,000 and it will be interesting to watch traders’ reactions and price behavior for the rest of 2021.
The Bull Run Will Likely Continue
The liquidity in bitcoin has been a telltale sign that more institutional bodies are at play. Similarly, throughout 2021 the institutional interest is expected to drive the prices of bitcoin and other cryptocurrencies.
In another sign of the mainstream growth of cryptocurrencies expected in 2021, major cryptocurrency exchange Coinbase is expected to become a publicly-listed company this year. The exchange’s institutional assets increased from $6 billion to a whopping $20 billion between April and November of 2020.
Caused by the U.S. dollar’s cyclical bear market and global liquidity, bitcoin will benefit significantly from people hedging against inflation. Many retail traders will also jump in due to the fear of missing out (FOMO), pushing the price further. Traders who will not want to invest directly in bitcoin will trade contracts for difference (CFDs) on bitcoin via forex brokers and trading platforms.
A note to institutional clients from Tom Fitzpatrick, the global head of CITIFX, leaked on Twitter. The note showed a chart of three bitcoin bulls in the last decade. He suggested that the bitcoin rally could hit a peak of $318,000 in December 2021. However, other analysts such as BTIG and Bloomberg have been more conservative, predicting the price will reach $50,000.
Fiat Fiscal And Monetary Policies
Besides a weak monetary policy, the dollar could also be affected massively by the COVID-19 vaccine rollout. For these reasons, the demand for bitcoin might increase significantly.
Pullback Could Happen
Bitcoin’s popularity as digital gold is spreading fast. However, unlike gold, bitcoin is experiencing its first global crisis, caused by COVID-19, as it was born in 2009 following the 2008 financial recession. The 2020 bear run in the market saw investors sell equities for cash. Even gold, which is considered by many to be a safer investment than bitcoin, dipped in March. Bitcoin crashed hard in mid-March too, but the bitcoin case was different. The cryptocurrency bounced from the bottom a month later in a bull run that continued until the end of the year.
Competition From Central Banks And Big Tech
Likewise, 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. For instance, China is working toward the adoption of a digital yuan. In many critical ways, these central bank digital currencies will be vastly different than bitcoin.
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.
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