From Landon Manning
Bloomberg, the Manhattan-based media and financial services company, released a report this month claiming that the price of Bitcoin will rise sharply by the end of the year.
The company has been publishing a monthly “Crypto Outlook” report for some time, covering a number of developments in the wider world of cryptocurrency that may be of interest to the financial sector. The April issue of “Crypto Outlook” was released on April 6th, claiming that the “rising tide” of Bitcoin adoption predicts a bullish period of growth for the world’s leading decentralized digital currency.
In particular, the report made the bombastic claim that Bitcoin would hit a price of $ 400,000 by the end of the fourth quarter of 2021, this claim being based on multiple data points. This number was first arrived at by analysts through a series of calculations on Bitcoin’s history that tracked its general tendency to increase in value along with other factors such as liquidity, volatility, the number of times Bitcoin mining subsidies were halved, and more. While Bloomberg has quite a sophisticated data analysis under its roof that underpins bold explanations like this one, there are a number of other factors that could lead to this price spike in 2021.
For one, the COVID-19 pandemic has hit a whole host of more traditional assets. The report said that “Money managers who are reluctant to cross the Rubicon and allocate at least a small portion of the funds could be at risk as Bitcoin simply makes more of it and raises the price amid unprecedented low interest rates and higher stocks.”
In other words, Bitcoin’s continued growth despite a flagging economy has made it one of the few places where larger institutional investors can safely park large amounts of money and ensure they are gaining value. That confidence is bolstered by the fact that Bloomberg analysts claim that the percentage of HODLers looking to sell is much lower than usual as people hold onto their coins.
Fueled by more than just business investment, however, the weight of Bloomberg’s argument rests on the belief that Bitcoin is presenting its use case as a permanent store of value to a wider and broader group of people. Rather than trying to inflate promising numbers for long-term growth, this “Crypto Outlook” looked at some hard data and compared Bitcoin as a store of value to the status of time-honored gold. And gold looks all the worse for it.
Confident enough in that position to be reporting days after the April Crypto Outlook was released, Bloomberg claims that Bitcoin’s resounding success means it is practically replacing gold as a coveted store of value much faster than expected. Gold and government bonds lagged even before the lull in the COVID-19 pandemic, with these two assets having a strong correlation throughout history. But Bitcoin thrives on fiat instability.
However, all of these numbers are just speculation. Nonetheless, Bitcoin is currently enjoying an extended period of triumphant success, having weathered several downturns and kerfluffles that have been claimed to be the first dominoes to bring the asset’s pandemic prices down. Instead, however, it has risen all the higher.
The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.