Despite Bitcoin price cooling off in recent days, with the premier cryptocurrency currently hovering around the $32,000 mark, it is still showcasing strong technicals as well as a thirty-day price gain of nearly 40%. Not only that, but even since its recent dip — which has seen the digital asset fall from its recently established all-time high of around $42,000 to its present value — the top crypto is still in the green over the last 12 months, exhibiting a value spike of nearly 300%.
In this regard, since the fourth quarter of 2019, a number of traditional finance players have been predicting big things for Bitcoin (BTC), especially as governments all over the world continue to print money in the form of “economic stimulus packages,” leading to fears of inflation becoming more prevalent but also of a looming economic disaster that could potentially result in a global recession of unprecedented proportions.
For example, during the second quarter of 2020, the economy of the United States plunged at an unprecedented rate, with the global powerhouse’s gross domestic product, which outlines a nation’s total output of goods and services, falling by 31.4%.
In the wake of such developments — including an alarming rate of money being printed by central banks globally — many investment houses and banking institutions are now beginning to see a future for Bitcoin, especially as a hedge against monetary inflation, despite its current volatility levels.
Many institutions see BTC at $100,000-plus
Earlier this year, American megabank JPMorgan Chase’s strategy team, led by Nikolaos Panigirtzoglou, claimed that a theoretical target of $146,000-plus could be sustainable for BTC by the end of 2021, pushing the narrative that the digital currency seems to be a prime candidate for replacing gold as a long-term store-of-value, especially for a budding base of younger, more tech-savvy investors.
In a similar vein, new data released by Pantera Capital, an investment firm and hedge fund, reiterates JPMorgan’s sentiments surrounding BTC, suggesting that its price action is closely following the Stock-to-Flow model, thus reaffirming its faith in the digital asset hitting the $115,000 mark by Aug. 1.
The S2F model that was developed by PlanB looks at BTC halving events that take place roughly every four years and how they play a direct role in spurring the currency’s value roughly six months after each cycle. In this regard, one can see that following each of the previous three halvings, Bitcoin has shown remarkable growth. For example, after the May 2020 halving, the price of 1 BTC rested at $8,000, only to shoot past the $15,000 threshold after exactly six months.
Raiffeisen Bank too employed the S2F model in a recent report to ascertain where Bitcoin might be headed in the near future. According to the company’s research team, price targets beyond the $100,000 mark or even $1 million may be possible to achieve. “The fact is, now that the value has more than tripled in 2020 and momentum remains strong, future further gains should not surprise us,” the study reads.
Other prominent players from the realm of traditional finance who have projected big things for BTC in the short term include individuals such as Andy Yee, public policy director for Greater China at cross-border payments provider Visa, who believes that this rally is different from the one in 2017, as it marks a shift from high-speculative, nonfunctioning tokens toward Bitcoin and Ether (ETH).
Similarly, Thomas Fitzpatrick, global head of U.S.-based financial giant Citibank’s CitiFX Technicals market insight product, allegedly wrote in a private report — which was leaked online — that by December, Bitcoin has the potential to scale up to a price of around $318,000.
Fanciful projections or imminent reality?
Even though the S2F model was at first one of the few technical indicators signaling Bitcoin’s astronomical rise, it now seems that an increasing number of experts and analysts are beginning to see the technological and monetary proposition being put forth by BTC and other cryptocurrencies.
Sam Tabar, co-founder of Fluidity — the company behind the AirSwap trading platform — and former head of capital strategy for Merrill Lynch told Cointelegraph that everyone needs to remember that the optimism surrounding BTC at this point is not just fluff, as speculation is now backed by real substance, adding:
“Bitcoin is not ruled by any one person or government. Instead, it is ruled by the simple laws of supply and demand. [...] In essence, Bitcoin is two sides of the same coin: On the one side is a global currency, and then the other side is digital gold.”
As a proxy for a global currency, the friction of buying crypto has been significantly reduced, as it’s easier than ever before to acquire Bitcoin. Similarly, as a proxy for gold, Tabar opined that Bitcoin is being used as a hedge against the U.S. dollar, especially as the newly elected President Joe Biden looks to spur U.S. dollar spending in order to prop up the economy against the effects of COVID-19 lockdowns.
Providing a more technical breakdown as to why institutions are betting big on Bitcoin, J. P. Thieriot, CEO of asset trading platform Uphold, told Cointelegraph that unlike traditional dollar debasement havens like gold and other commodities, Bitcoin has zero elasticity on the supply side.
He highlighted that if/when the price of gold reaches $3,000, marginal gold mines will once again fire up, with the same dynamic being applicable with oil and every other non-math-based unit of account. Thieriot believes that “The unique lack of supply-side elasticity means that, price-wise, BTC will respond more precipitously than things like gold, to the exact same drivers.” He further added:
“BTC is in the early stages of its rollout. As it metamorphosizes from fringe curiosity to portfolio must-have, it’s pretty logical to assume that inflows will grow. If I were a bookie, I’d say the over/under for Dec 31, 2021 midnight... is $85,000.”
Lastly, the ever-increasing institutional demand seems to be changing the digital-asset market, which in turn is driving many banks to make seemingly outlandish price projections in relation to BTC. For instance, more funds are now looking to enter the crypto game, and recently, American firm Osprey Funds announced that it will be launching its over-the-counter crypto solution, Osprey Bitcoin Trust, which will likely rival Grayscale Bitcoin Trust.
Investor sentiment surrounding BTC is high
When looking at the market sentiment surrounding Bitcoin, the digital currency is increasingly showing correlations with the core functions traditionally afforded by traditional fiat currencies for their users — that is, it has become a unit of account, a standard of deferred payments and, lastly, a tangible long-term store of value.
Also, over the course of 2020, an increasing number of e-commerce platforms added support for Bitcoin and other cryptocurrencies as a method of transaction to pay for goods and services. PayPal, for example — a company that boasts a 28-million-strong merchant base — now allows users to buy, sell and store cryptocurrencies via its platform.
On the subject, Paolo Ardoino, chief technology officer of crypto exchange Bitfinex, told Cointelegraph that consumer sentiment around Bitcoin is overwhelmingly bullish right now and that people who are celebrating the rise of various altcoins and other off-chain solutions owe their success to the flagship crypto, adding:
“The king of crypto is the base layer for an emerging alternative financial system. Bitcoin is providing a solid foundation for a staggering array of projects, some of which will fundamentally change the nature of money by the end of the decade.”
Thieriot believes that the sentiment driving BTC is a result of previously unseen levels of currency debasement generated by the monetary response to COVID-19. Beyond retail speculation, he believes corporations are looking to hedge their fiat exposure, evidently seeing some relative advantages of Bitcoin over traditional havens like gold and subsequently jumping in. “The early jumpers have been handsomely rewarded, and so the trend is likely to continue,” he added.
Lastly, Tabar highlighted that one of the more recent signs of growing consumer sentiment and institutional acceptance regarding BTC has come in the form of recent filings made by BlackRock, an American multinational investment management corporation with $8.7 trillion in assets under management as of the end of 2020. A quick look at the filings showcases a strong use of crypto-oriented language alluding to the company’s funds potentially engaging in “futures contracts based on Bitcoin.”