2020 has been a rollercoaster for Bitcoin: in March it plummeted once to USD 4K, but gradually reached USD 19K, surpassing its highest intraday record set in December 2017. As 2021 approaches, analysts have made many price predictions for the largest cryptomone currency. Before entering the market, let's take a look at the main factors of its rise.
Institutional interest has been the main driver of Bitcoin's price in 2020. To name a few, Visa, Square and Paypal will gradually support Bitcoin payment, while Wall Street companies like Greyscale and Boston Private Wealth have added Bitcoin to their portfolios. Across the ocean, Banca Generali, one of Italy's leading private banks, announced that it will provide Bitcoin custody to its customers. Wall Street companies, big names in the industry and even several government agencies are showing interest and confidence in crypto currency.
Bitcoin Benefits from Pandemic
Bitcoin is one of the best performing assets in the midst of the COVID-19 pandemic, due to its scarcity. The total maximum supply of Bitcoin is 21 million, and the halving takes place every four years, so no Bitcoin will be in circulation by 2140.
With the whales accelerating their pace to buy more Bitcoin, Chainalysis estimates that there are only 3.4 million liquid Bitcoins currently for investors. Glassnode data shows that the number of Bitcoin wallets with a full coin or more is at an all-time high. The buying pressure is increasing and it will be more difficult for newcomers to have a share of Bitcoin.
Bitcoin may be one of the few things that will benefit from the pandemic. To boost the economy, bolder economic policies and stimulus packages will add fuel to inflation. While traditional investors are turning to gold to protect against inflation, millennials prefer Bitcoin and altcoins. Falling liquidity, coming inflation and global uncertainties are some of the factors that could push Bitcoin up in 2021.
Where will Bitcoin be in 2021?
Some wild guesses are that Bitcoin could be over $100,000 or $318,000 by the end of 2021.
It's pretty rare to see most analysts sharing bullish sentiments and making wild predictions that seem too good to be true. The $100,000 target is proposed by PlanB, the creator of Stock-to-Flow. PlanB's prediction is based on the decreasing supply and increasing demand for Bitcoin. Given its performance after previous halvings, Bitcoin has the potential to reach $100,000 to $288,000 by December 2021.
The $318,000 mark is cited by Citibank analyst Tom Fitzpatrick. The senior also based his theory on Bitcoin's past performance, saying that Bitcoin could repeat its price action from 2010 to 2011, taking Bitcoin to $318,000.
