Less than 3 months are left as we head towards the end of 2021, and Bitcoin is inching closer towards a new record high. But, how will the crypto end in 2021? Will it follow the same rally as the end of the previous year or this time there will be some corrections?
Bitcoin is currently trading above $59,000 and might pass the resistance of $60,000 with enough demand in the market. It recently regained the $1 trillion market cap, and the demand within both retail and investors is growing.
Target $100K
While Bitcoin bulls and influencers are always optimistic about the value of the digital currency, many financial institutions are now seeing a massive upside to Bitcoin prices. Standard Chartered last month predicted that Bitcoin’s fiat value might touch $100,000 by the end of 2021 or early 2022.
Can Bitcoin Reach $100,000 in 2021? Five Charts Show Potential - Past #Bitcoin trading trends and the crypto's declining supply vs. mainstream adoption suggest a significant advance in 2021, potentially to $100,000, we believe. pic.twitter.com/0tH7PS7QEI
— Mike McGlone (@mikemcglone11) September 16, 2021
But, is that a too optimistic value for Bitcoin?
“Bitcoin is actually aligning pretty perfectly with PlanB's S2F model right now. PlanB uses three different models of S2F, which are used in the traditional commodities market to speculate on the prices,” said Gate.io CMO, Marie Tatibouet.
“According to the model, the price of Bitcoin should reach $135,000 by Christmas 2021.”
However, not all experts are coming out with such bold prediction statements despite being bullish on the short-term price movement.
“I think BTC can make a run at the old high at $65k and maybe make a new high,” William Noble, Chief Technical Analyst at Token Metrics, told Finance Magnates. “It’s easy to talk about a new high with the recent rally. I think BTC may correct in December, as the reality of capital gains taxes eventually going higher should set in.”
Factors Pushing BTC Prices
Though the crypto market is already running bullish after some corrections in recent months, recent positive developments have further pushed the uptrend. The recent reports of the possibility of a Bitcoin futures ETF approval by the US regulator have added a couple of thousands of dollars to the Bitcoin price.
Also, the Fed Chairman, Jerome Powell's revelation that the US is not likely to ban crypto, like China, has maintained investors' faith in the digital currency.
Karan Sood, the CEO and Managing Director at Cboe Vest, explained: “There are two fundamental reasons for the growing interest in Bitcoin: 1) Monetary policy actions have been inflationary, and combined with increasing levels of debt and deficit, jeopardize the reserve currency status of the U.S. dollar. With its limited supply, Bitcoin holds the promise of being a storehold of wealth and a hedge against the decline in the value of US dollars. 2) Additionally, by virtue of being the most mature and liquid coin in the cryptocurrency universe, Bitcoin represents the means to gain exposure to the increasing size of the crypto-economy, including developments in decentralized finance and non-Fungible tokens.”
Institutions Are Bullish
But, the biggest reason behind the Bitcoin rally remains the growing institutional demand. After corporates like MicroStrategy and Tesla have been holding billions of dollars worth of Bitcoin, banks have now started to offer crypto products to wealthy clients.
The demand for Grayscale products have increased significantly in the past few months. According to CoinShares, digital assets have seen eight straight weeks of positive inflows totaling $638 million.
“The adoption by institutional investors continues at warp-speed,” Sood added. “Several established asset manager funds have publicly announced holding Bitcoin and other crypto-assets. The significant increase in the open interest and volumes traded in Bitcoin futures is another testament to the surging interest from institutions and financial professionals.”
Now, if the SEC finally confirms Bitcoin ETFs, it will open the flood gates for mainstream Bitcoin adoption by both institutions and retail investors. Furthermore, other macroeconomic factors like low-interest rates are pushing institutional money towards crypto.
"In a continued low-rate environment, institutional money will always flow towards higher yields. It remains to be seen whether that interest will subside once rate hikes occur in 2022. And also, that’s focused on the US market. Rates are still low (or negative) elsewhere, but the macro-economic trends must be measured against country-level realities that push institutional investors towards different asset allocation strategies,” said Diane Dai, Co-Founder of DODO.
