2020 has been a rather eventful year, as we saw crypto going as low as $3800, and as high as $18000 at the time of this writing. For many, the upcoming year is the one they’ve been eagerly waiting for, as historic events seem to be in Bitcoin’s favour, judging from past price patterns.
So, how high can Bitcoin go in 2021, and what are the catalysts that will help us get there? In this article, we give a brief overview of everything you need to know. After reading this post, you should know whether it’s a good idea to buy Bitcoin or rather stay away from it.
2020 is slowly coming to an end
What an eventful year this was. 2020 exposed the instabilities of our current economic system and showed to everyone that there is a desperate need for reorganization – both financial and political. Covid19 was certainly the most important reason for this, as the US government printed more money than ever before in its history. Analysts expect to see inflation rates of 27% in this year alone, making many institutions turn to Bitcoin to protect their wealth.
Here are a few things we can confidently assume as this year is coming to an end:
- The Bitcoin halving was not priced in and is expected to drive more retail interest within 2021.
- The pandemic-related price drop was mainly caused by retail investors who took emotional decisions as a response to global panic.
- The price of Bitcoin seemed to correlate with other investment markets during the temporary market crash but completely decoupled from it during its recovery.
- Covid19 was the “kickstart” to institutional investments into Bitcoin.
What does this mean for the previously ambitious price targets of respected analysts and Bitcoin maximalists? Do they set targets that may be too low? Or are they on spot?
2021 will be different
2021 with be the year of HODL FOMO. After a publicly-listed company, Microstrategy, took the bold move to invest all of its cash reserves into BTC, a lot of companies followed suit. Inflation will hurt many successful businesses, even if they managed to remain open during the months of the pandemic. And this will naturally lead to a mass hoarding of Bitcoin from institutions.
Not many realize this, but the money that circulates in the cash reserves of institutions is massive. And before retail even understands what is going on, governments will also start allocating their funds into Bitcoin. There are a small number of countries that do so already, by directing their energy reserves into Bitcoin mining.
By the time we see retail investors enter the sprint, the price of Bitcoin will probably the market cap of gold.
If Bitcoin reaches the market cap of gold at the time of this writing, each coin would be worth approximately $400.000, not taking into consideration the devaluation of the US dollar in the timeframe it will require us to get there.
Hopeful target or inevitable result?
We already know that Bitcoin is a more efficient and superior store of value than gold and that younger generations find it a lot easier to understand it and invest in it. So, in many ways, the question is not “if”, but rather “when” Bitcoin will manage to surpass gold.
Our best guess is that 2021 could be the year that starts the process. Since all BTC bought by institutions is stored in cold storage for years to come, the supply of the open market will decrease at a fast pace. By the time the media catches up to the trend, Bitcoin might’ve crossed the $100.000 mark already.
And as far as the eventual market decline is concerned, don’t expect to see price drops as sharp as the ones we experienced in 2018. The market now has matured enough for its participants to understand its dynamics. Our best guess is that eventually, we will have a correction take price, but that this correction will be a lot “easier to stomach” than what most hodlers had to go through in the past.
Wrapping up, our bitcoin price forecast is tiered. And here is the best way to explain this:
- By the end of 2020, we expect Bitcoin to reach and surpass its ATH.
- In the first quarter of 2021, we should see a lot of selling pressure, which will keep BTC between $18.000-$28.000.
- If history repeats itself, in the second and third quarter of 2021 exponential growth begins. $100.000 will be broken easily, and the price will continue to grow.