Bitcoin price prediction for 2021: over $100,000? Proponents say it's a certainty

Bitcoin investors, including top hedge funds and money managers, are currently betting that Bitcoin may soar more than four times to $100,000 within a year.

Bitcoin price prediction for 2021: over $100,000? Proponents say it's a certainty

Skeptics scoffed at this, believing that the volatile virtual currency is nothing more than a speculative asset, not a store of value like gold.

Since January, Bitcoin has risen by 160%, on the one hand because of strong demand from institutional investors, and on the other hand, when payment companies such as Square and Paypal are buying on behalf of customers, the amount is quite scarce.

Bitcoin is approaching a record high of just under $20,000 set in December 2017. Bitcoin was worthless when it came out in 2011, and it has now reached $18,415.

Brian Estes, chief investment officer of hedge fund Off the Chain Capital, said that Bitcoin's rise from $18,000 to $100,000 within a year is not a dream.

"I have seen Bitcoin rise 10 times, 20 times, and 30 times in a year. So a 5 times increase is not a big deal."

Estes predicts based on a model that by the end of 2021, Bitcoin may rise to between US$100,000-288,000. The model uses the inventory-to-flow ratio to measure the scarcity of commodities such as gold. Estes claims that the correlation between the model and the price of Bitcoin is 94%.

Citi technical analyst Tom Fitzpatrick said in a report last week that by the end of next year, Bitcoin may rise to $318,000 due to limited supply, ease of cross-border mobility and ambiguous ownership.

But these forecasts make it difficult for Canadian proprietary trader Kevin Muir to understand.

"Any hedge fund's Bitcoin model is rubbish. You can't model fanatical things," Muir said. "

Is this reasonable? Sure, this is a frenzy. But does anyone really know? It is absolutely impossible. "

**Supply scarce**

Bitcoin relies on so-called "mining" computers. Mining machines compete to solve mathematical problems and verify transaction blocks every 10 minutes. The first to answer the question and settle the transaction will receive new Bitcoin.

The design concept of this technology is that every four years, the number of newly increased bitcoins is halved. Aims to curb inflation. In May of this year, Bitcoin experienced the third "halving", which further restricted supply.

The halving started a new rally for Bitcoin.

Hedge fund Pantera Capital stated in a letter to investors on Friday that Square’s Cash App and PayPal have already pocketed all newly generated bitcoins, which has caused a shortage of bitcoins and has pushed prices up in the past few weeks.

**Big money influx?**

Phil Bonello, head of research at the digital asset management company Grayscale, said that the whale index has hit an all-time high, which counts addresses or wallets that hold at least 1,000 bitcoins. Bonello stated that more than 2,200 addresses are associated with large Bitcoin holders, an increase of 37% from 1,600 in 2018, indicating that institutional funds have been flooding in.

Druckenmiller, founder of the hedge fund Duquesne Capital, and Rick Rieder, the chief investment officer of Blackrock's global fixed assets, have also been enthusiastic about Bitcoin recently.

However, due to the impact of the epidemic on the economy, most retail investors still hold a wait-and-see attitude. But with the entry of Square and PayPal, Lennard Neo, head of research at crypto index fund provider Stack Funds, predicts that the surge in retail demand will be stronger than in 2017.

Neo expects Bitcoin to reach $60,000-80,000 by the end of 2021.

Juan Perez, a foreign exchange trader at Tempus Inc, was dissatisfied with the above-mentioned high estimates and was even shocked. He also stated that betting that Bitcoin will reach US$100,000 in the specified year is a bet on the collapse of the global financial system.

"Governments around the world will not let this happen. They will not let the fiat currency just collapse like this," Perez said.