Bitcoin has once again captured the attention of global market players this year, with its price soaring higher than other assets, including gold. In fact, there are “crazy” predictions for bitcoin’s price next year, making gold seem “lacking” in comparison. This is why more and more people are buying bitcoins later this year. Buy bitcoin is a popular phrase today!
When viewed from this time of year or since the beginning of the year (YtD), this cryptocurrency has surged by more than 155%. In comparison, gold has “only” increased by 23%. Bitcoin now represents approximately 6.5% of the all-time high cost of USD 19,458.19 per BTC, which was reached on December 18, 2017.
An increase of over 155% this year may be considered impressive, but according to a technical analysis, Citibank predicts that bitcoin “on the moon” will exceed 1600% next year. By the end of 2021, bitcoin is expected to reach USD 318,000 per coin, which is crazy! The prediction was leaked to the public via social media platform Twitter. In its consumer notes, the analyst referred to Bitcoin as the “21st century gold.” “The entire existence of Bitcoin has been marked by unimaginable performances followed by painful corrections, the kind of patterns that underlie long-term trends,” wrote Tom Fitzpatrick, Global Head of CitiFX Techninal at Citibank, in a note to institutional clients, as quoted by Forbes on Friday (November 20, 2020).
“Based on the three bullish trends (uptrend) in progress over the last decade, the current rise in bitcoin prices has the potential to peak in December 2021, indicating a move up to USD 318,000 (per coin).” “Time will tell if Bitcoin finally reaches such heights, but previous events suggest the potential for a significant move higher in the next 12 to 24 months.” The note stated that one of the reasons for the increase in bitcoin prices was its growing reputation as digital gold.
Considered digital gold, the factors influencing its movement are, of course, the same as those for physical gold. Monetary and fiscal policies, rising inflation, and the weakening of the US dollar are the “fuel” for gold to keep climbing. Bitcoin will certainly appreciate this too, as an easy monetary policy and a wave of fiscal stimulus will continue into next year. However, the prediction for gold’s rise next year is less bright than that of bitcoin. Analysts predict gold will reach the level of USD 3,000, USD 4,000, and even up to USD 10,000 per troy ounce, but not next year, rather in the coming years or long-term.
Thus, this gold might look “less promising” than bitcoin. In addition to its tracking of gold, seasoned investors, such as Paul Tudor Jones and Stanley Druckenmillier, have also started investing in Bitcoin, which has made cryptocurrency “enthusiasts” even more excited. At CNBC International’s “Squawk Box” event last May, Jones said that bitcoin was a “very good speculation” and that there was about 2% bitcoin in his investment portfolio. “More than 1% of my current assets are bitcoin, maybe close to 2%, and that seems to be the right number for now,” said Jones, as reported by CNBC International. For investors in general, Jones’s investment in bitcoin is something unusual.
But according to Jones, bitcoin is better than cash, such as the US dollar. “If you hold cash, you know that the central bank aims to depreciate the exchange rate by 2% annually. So, basically, holding cash is equivalent to making your assets worth nothing,” he said. Meanwhile, Stanley Druckenmiller believes that inflation in the United States will continue to rise over the next 5 to 6 years due to the US central bank’s monetary stimulus (Federal Reserve / Fed), and he likes gold and bitcoin as a hedge against the risk of rising inflation.
