What should we expect? – Bitcoin Magazine

The price of bitcoin has increased by around 300% in the past 12 months thanks to widespread adoption and institutional interest. He rallied overwhelmingly to all-time highs of $ 41,000. As of this writing, the price is hovering around $ 35,000 and it will be interesting to watch traders’ reactions and price behavior for the remainder of 2021.

The Bull Run will probably continue

Bitcoin’s bull cycle is likely to continue, particularly in the second half of 2021. One of the causes of the price increase will be widespread adoption. Currently, relatively few people accept and use Bitcoin in everyday life. However, we could see widespread acceptance in the coming months. For example, PayPal allowed its users to buy and sell bitcoins using PayPal accounts. Additionally, Square has invested $ 50 million in bitcoin. A common adoption like this could dramatically increase the price of bitcoin.

Bitcoin’s liquidity has been a telltale sign that more institutional bodies are at stake. Likewise, throughout 2021, institutional interest is expected to drive up the prices of bitcoin and other cryptocurrencies.

Another sign of the general cryptocurrency growth expected in 2021, the main cryptocurrency exchange Coinbase is expected to become a publicly traded company this year. Institutional assets on the exchange grew from $ 6 billion to $ 20 billion between April and November 2020.

Caused by the cyclical bear market in the US dollar and global liquidity, bitcoin will benefit significantly from inflation protection. Many retail traders will also step in due to Fear of Missing (FOMO), pushing the price further. Traders who will not want to invest in Bitcoin directly will trade Bitcoin Contracts for Difference (CFDs) through forex brokers and trading platforms.

Institutional interest

As mentioned above, in October 2020 PayPal announced that it would support the buying and selling of cryptocurrency. In addition, other Wall Street institutions and giants have shown interest in cryptocurrency. For example, JPMorgan Chase & Co. and Citibank predict a bullish bitcoin market. According to a report leaked by Citibank, analysts are calling bitcoin 21st century gold, predicting it could reach $ 318,000 by the end of 2021. Likewise, Will Woo, a former partner of Adaptive Capital, called $ 200,000 a conservative price.

A note to institutional clients from Tom Fitzpatrick, the global head of CITIFX, has leaked on Twitter. The note showed a chart of three bitcoin bulls over the past decade. He suggested the bitcoin rally could peak at $ 318,000 in December 2021. However, other analysts such as BTIG and Bloomberg have been more conservative, predicting the price to hit $ 50,000.

Fiat’s fiscal and monetary policies

Fiscal policy and monetary policies aimed at devaluing the currency will work in favor of the price of bitcoin. Much of the demand will come from investors who fear that money printing will devalue conventional currency. As fiat currency gets out of hand, bitcoin is seen as an asset just like gold.

In addition to weak monetary policy, the dollar could also be massively affected by the deployment of the COVID-19 vaccine. For these reasons, the demand for bitcoin could increase dramatically.

A withdrawal could occur

Although cryptocurrency proponents are exuberant, it is possible that bitcoin prices will not break above the all-time high of 2020. In fact, the price may drop and stay below that mark for some time, like this was the case during Rally 2017. Some believe the only time bitcoin will likely reach another significant high is in 2024, after the next mining subsidy cut.

Bitcoin’s popularity as digital gold is spreading rapidly. However, unlike gold, bitcoin is experiencing its first global crisis, caused by COVID-19, as it was born in 2009 as a result of the 2008 financial recession. The 2020 bearish race in the market has seen investors sell stocks for money. Even gold, considered by many to be a safer investment than bitcoin, fell in March. Bitcoin also crashed in mid-March, but bitcoin’s case was different. The cryptocurrency rebounded from the low a month later in a bull run that continued through the end of the year.

Regulators

Regulators have scrutinized digital currencies for years. Some people, although few in number, use cryptocurrencies to engage in illegal transactions and with the increasing value of cryptocurrencies, governments around the world will be taking a close look at the market. For example, a lawsuit by the United States Securities and Exchange Commission (SEC) against the Ripple altcoin project saw XRP prices fall by almost half.

Regulatory agencies could suddenly erect an obstacle to tame the unscrupulous activity surrounding bitcoin, but this regulation could not significantly affect Bitcoin’s bullish trend.

Competition from central banks and major technologies

Transactions involving different fiat currencies can take days and involve high fees, and a global digital currency could dramatically streamline this process in 2021. As bitcoin adoption grows, cryptocurrency may face competition to resolve this big tech problem. A good example is Facebook’s digital currency, and while Facebook diem is quite different from Bitcoin, it could distract from bitcoin in 2021.

Likewise, central banks are also in competition with bitcoin. As reported by Banks for International Settlements, 80% of central banks are on the verge of developing some form of digital currency. For example, China is working to adopt a digital yuan. In many ways, these central bank digital currencies will be very different from bitcoin.

Conclusion

In general, the adaptation of bitcoin in trading is a perfect cause for price increases in 2021. While the price and adoption of bitcoin is expected to proliferate, we cannot rule out the opposite and volatility is certainly possible.

This is a guest post from Michael. The opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.