Wednesday December 16, 2020
Professionals warn of "mania"
Bitcoin high makes speculators dream
The Bitcoin cracks the mark of 20,000 US dollars for the first time – and the scarce currency is expected to rise further. Crypto experts come up with superlative predictions. The value could increase at least fivefold. But there are also firm warnings.
Who offers more? No expert forecast for the increase in the Bitcoin price currently seems absurd. Brian Estes, chief investor of the hedge fund Off the Chain Capital, sees the oldest and most important cyber currency at $ 288,000 by the end of 2021. That's roughly 14 times the current record high of around $ 21,000. "I've seen Bitcoin increase ten, twenty, and thirty-fold within a year." The fivefold increase in the price compared to the low in March is therefore no big deal.
Naeem Aslam, chief market analyst at the brokerage house Avatrade, argues similarly, calling out a comparatively low price target of $ 100,000. "You might want to laugh at the thought of that, but you mustn't forget where the course was six years ago." At the end of November 2014, a Bitcoin cost around $ 375. Since then the price has increased more than fifty-fold.
Citigroup analyst Tom Fitzpatrick even believes Bitcoin will increase to as much as $ 318,000 in the coming year. He justified this with a limited offer, among other things. "Off the Chain" expert Estes bases his forecast on a model for calculating the scarcity of goods such as gold.
"Bitcoin predictions by hedge funds are no good"
These approaches are nothing but headshakes from Kevin Muir, an independent cryptocurrency trader. "None of the Bitcoin predictions made by hedge funds is any good. You can't pour a mania into a model." It is quite conceivable that Bitcoin will rise to $ 200,000 or $ 300,000. "But does anyone really have a clue? Never in your life!" Forex trader Juan Perez from the financial services provider Tempus is also skeptical. A Bitcoin rate of $ 100,000 would be a bet on the collapse of the world financial system. "The governments of the world will not let that happen."
Bitcoin is an Internet currency, the rate of which is determined solely by supply and demand. New digital coins are created by the fact that users provide computing capacity for the encryption of transactions and are rewarded for this in Bitcoin. The amount of Bitcoin issued in a certain period of time is automatically halved at regular intervals to prevent inflation. The last "halving" so far was in May 2020.
A maximum of 21 million Bitcoin can be created, there are currently 18.5 million. The shortage of supply is exacerbated by the entry of payment service providers such as PayPal or Square into the cryptocurrency business, write the experts at the Pantera hedge fund in a letter to shareholders. They soaked up cyber forex like a sponge.
At the same time, the "Whale Index", which counts cryptocurrency accounts with balances of at least 1000 Bitcoin, has reached a record high, says Phil Bonello, chief analyst at Grayscale, the asset manager specializing in cyber foreign exchange. There are now more than 2200 such large depots. That is an increase of 37 percent compared to 2018. Another indication of the growing interest of institutional investors is the increase in the trading volume with Bitcoin futures contracts on the US exchange CME, says analyst Salah-Eddine Bouhmidi from brokerage firm IG. According to the data provider Skew, futures with a volume of more than one billion dollars were traded there in mid-November for the first time within a week since the title was launched at the end of 2017.
Cyber currencies received additional attention due to the apparently approaching market launch of "Libra", says analyst Timo Emden from Emden Research. According to the "Financial Times", the Internet currency of the online network Facebook is due to start in January 2021, but in a slimmed-down version due to opposition from central banks and regulatory authorities. Whether the digital motto, which has since been renamed "Diem", will receive the green light this time is questionable, warns Emden. At the same time, central banks are already working on their own crypto currencies. "Even if Bitcoin does not have to play a role in the end, the crypto currency is currently at the top of the list for investors as a hot speculative object," says analyst Jochen Stanzl from the online broker CMC Markets.
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