Bitcoin is currently unstoppable. Why the digital currency is on track to trade beyond US$100,000 in 2021.
On Wednesday, December 16 of this year, Bitcoin surpassed the 20,000 U.S. dollar (USD) mark for the first time in its history. This meant that everyone, without exception, who invested in BTC was in the green. The high spirits on the short message service Twitter were correspondingly high. Even Edward Snowden is now on board.
One word: Bitcoin.
— Edward Snowden (@Snowden) December 16, 2020
The No. 1 cryptocurrency is thus up 186 percent since the beginning of the year. Those who follow the crypto market less closely are inclined to dismiss recent price developments as pure bubble formation similar to the crypto hype in 2017.
Unlike in 2017, however, the current price developments are fundamentally justified. This is shown, for example, by a look at Google Search Trends. Bitcoin-related search queries shot up within a very short time at the end of 2017 when BTC was trading in similar spheres. All the media reported, the market, we know in hindsight was overheated and could not bear the onslaught of crypto-lucky knights. Today: emptiness.
Moreover, the 2017 rally was even more exorbitant than this year. In 2017, the “Orange Coin” rose from about $1,000 to just under $20,000 – a gain of 2,000 percent. That this was too much of a good thing, even for the volatile cryptocurrency, comes as no surprise.
Where is the journey heading?
In fact, Bitcoin behaves surprisingly predictably. If you apply the stock-to-flow model, for example, you almost get scared. The precision with which PlanB predicts the rise of a new money is almost unbelievable.
Still can't believe how accurate PlanB's Bitcoin S2F model price line is. It's amazing. If Bitcoin continues to follow the S2F model price, 2021 will change our lives.https://t.co/sP4sVDQwma pic.twitter.com/OFwcdoX2ea
— Bit Harington (@bitharington) December 14, 2020
Accordingly, the current price action is most comparable to 2016. Back then, the Bitcoin inflation rate halved and the price slowly but surely moved towards the all-time high of 1,100 US dollars established in December 2013. If we continue to use the template of previous cycles, we will probably see a bull market next year that will dwarf everything else. Although the No. 1 cryptocurrency keeps correcting sharply, the long-term trend is as clear as day: it is heading north.
Let’s say Bitcoin grows at the same rate as a year after the last halving, i.e. 2017, the price would be at 400,000 US dollars at the end of 2021. That sounds hair-raising. However, considering that Bitcoin has already experienced such price jumps twice in its history, this idea seems a bit more realistic.
PlanB predicts 288,000 USD per Bitcoin
PlanB itself predicts a price of at least USD 288,000 with its S2F model. The Winklevoss brothers also see Bitcoin on par with gold. If BTC reaches the gold market capitalization of about nine trillion USD, the price would be beyond 500,000 USD.
However, it is also clear that Bitcoin needs more and more fresh capital for further growth. After all, with 900 BTC being issued every day, it would take a buying pressure of 18 million USD alone to just maintain the current price level. On the other hand, considering that more and more Bitcoiners are withdrawing their coins from Exchanges and companies are now taking on debt to buy new BTC, the shortage in the market could provide new price highs.
These are all staggering numbers that have the potential to help individual players achieve almost unbelievable wealth. Nothing is guaranteed. But if you don’t realize that Bitcoin is in a historic uptrend that could well lead to adventurous prices, you’re not really looking. One thing is clear, however: 2021 will be a wild ride.