This week has been a historic moment for Bitcoin. Three years ago, after nearly passing over $20,000, Bitcoin fell into a two-year-long bear cycle. Now, Bitcoin has finally come full circle: after a year-long bull run, BTC’s latest price rise has brought the asset well over $20K. At press time, the price of Bitcoin had risen to $23,000, and was still steadily climbing.
When BTC hit $20K earlier this week, Michael Sonnenshein, Managing Director of Grayscale investments, told Finance Magnates that while it was “not a surprise to us that Bitcoin has hit $20K,” it was a “very symbolic threshold to reach at the end of what has been a historic year for Bitcoin.”
“The sustained growth of Bitcoin and other digital currencies this year is a reflection of this ‘coming of age’ story for the asset class, showing the long term staying power and growing investment interest from mainstream investors and institutions alike,” Sonnenshein told Finance Magnates. “Remember, these are just the early days, and we think there’s a lot more runway to go.”
A “lot more runway to go,” indeed, and with this “historic year” coming to a close, there are many questions on the horizon for Bitcoin and beyond: how will further stimulus efforts affect the economy? Will a COVID vaccine pump life into a depleted USD? And what does this mean for Bitcoin?
Alex Mashinsky: In 2021, “Bitcoin Should Be Hitting $30-$40k during 2021 Based on the Current Demand Curve.”
Alex Mashinsky, Chief Executive and Founder of crypto lending company, Celsius, told Finance Magnates that during 2021, he believes that Bitcoin “should be hitting $30-$40k during 2021 based on the current demand curve.”
Like Michael Sonnenshein, Alex Mashinky believes that Bitcoin still has a lot of room to grow, particularly within the traditional financial sphere: “I still think the vast majority of the current push up is retail,” he said. “While we love celebrating a few famous early adaptors from the finance world, their total buys to date as a percentage of the total BTC market capitalization is still very low.”
The economic outlook for 2021 could bring more investors, both retail and institutional, into Bitcoin markets.
Mashinsky specifically pointed to the ongoing “instability of the USD,” which he says “will drive many to Bitcoin.” However, this depends on at which point continual quantitative easing will cause USD inflation: “if we manage to continue printing and have no inflation, then BTC will grow at a slower pace,” he said.
However, Mashinky believes that the path forward will be a winding one, asserting that “we will see $16k before we see $26k.”
Indeed, it is possible that some of the growth that has brought Bitcoin to $23K is based on hype over BTC’s movement over $20K. Therefore, BTC could see a price drop before building its fundamental strength enough to stretch beyond $25K.
“We need mass adoption for sustainable growth in crypto, which means at least 500 million new users who come for store of value and yield,” Mashinsky said. In other words, Bitcoin needs more people to hodl it for the long term.
If that can happen, then anything is possible: when asked what BTC’s price outlook for 2025 is, Mashinsky said that while “it is hard to predict,” Bitcoin “should be over $200k by then.”
Zac Prince: “Corporate Treasury and Insurance Firm Allocations [of Bitcoin] Will Be Larger Than We Currently Expect” in 2021
Zac Prince, Chief Executive of crypto lending firm, BlockFi, is even more optimistic about where the price of Bitcoin could go over the next year. When asked about 2021, Prince said that he foresees Bitcoin headed somewhere between “$50K and $100K.” He also believes that it will be less than six months before Bitcoin reaches beyond $25,000.
Prince believes that the growth of Bitcoin throughout 2021 will ‘definitely’ come from both institutional and retail investors, particularly the latter: “corporate treasury and insurance firm allocations will be larger than we currently expect,” he told Finance Magnates.
Beyond that, Prince believes that “Bitcoin will primarily be gaining stability next year as the financial services infrastructure becomes more robust.”
Prince specifically mentioned the continuation of “the trend of Bitcoin integration onto major traditional platforms” as being important for Bitcoin’s growth next year. Earlier in Q4 of 2020, PayPal announced that it would allow its nearly 300 million users to purchase and pay with Bitcoin and several other cryptocurrencies.
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Of course, there are wrenches that could possibly be thrown in Bitcoin’s growth that could impact its trajectory in 2021. Zac Prince specifically mentioned the possibility of “overbearing regulation from major world governments” and “lack of continued belief in the asset’s store-of-value properties.”
Still, when we asked him where he thinks Bitcoin will be in 2025, Prince said that he also believes that Bitcoin will have surpassed the $200K point.
Miko Matsumura: “We Are Going to See Many Multiple Large Crypto Companies Going Public” in 2021
Miko Matsumura, Founder of the Evercoin cryptocurrency exchange and General Partner at Gumi Ventures, also believes that “major regulatory action” could destabilize Bitcoin over the course of 2021; further, a “serious competitor or security problem” could reverse the course of Bitcoin’s upward momentum.
However, Miko believes that if the current trends continue, Bitcoin could be at $30K by the end of 2021, and that BTC could be looking at $100K by 2025. Moreover, he believes that “we are going to see many multiple large crypto companies going public” throughout 2021, “including Coinbase, BlockFi, and Celsius,” a factor that could indirectly impact the price of Bitcoin in a positive way.
Additionally, Miko believes that retail investors are going to play the most important role in Bitcoin’s upward journey. However, Kadan Stadelmann, Chief Technology Officer of Komodo, believes that institutional adoption of Bitcoin could be the most powerful driving force behind its price.
Kadan Stadelmann: Bitcoin’s “Digital Gold” Narrative Will Take Hold in 2021
“I’m interested to see what the new ceiling is for Bitcoin,” he said to Finance Magnates. “Is it $30k? $100k? What’s so promising is that institutional adoption is happening on a daily basis.”
Stadelmann specifically pointed to the fact that earlier this month Italian bank, Banca Generali became the latest financial institution to announce that it will launch crypto services in 2021. Additionally, “Ruffer Investment Company, a London-based investment management firm, announced that 2.5% of its fund is now composed of Bitcoin holdings; more important to note is that the fund switched its holdings from gold to Bitcoin,” Stadelmann pointed out.
“A couple of years ago the narrative of Bitcoin as ‘digital gold’ might have been folklore or fairy tale to institutions. Going into 2021, this analogy is starting to become a widely accepted reality,” he said. “The topics that those within the crypto industry have long been talking about are finally beginning to take form and gain momentum on a global level.”
Steve Ehrlich: “It Wouldn’t Surprise Us to See $100k+ Bitcoin Next Year.”
“We expect on-going parabolic moves in this new macro-trend going into 2021,” he said. “With this in mind, it wouldn’t surprise us to see $100k+ Bitcoin next year.”
Erhlich’s beliefs are based on “the massive retail interest Voyager is seeing in our customer growth, and the excitement to earn compounding interest on Bitcoin and other digital currencies, shows us that the crypto community and new investors at large share this sentiment.”
Indeed, “We expect 2021 to be the year that Bitcoin and crypto take the world by storm, and become the established digital assets of choice for our technologically driven future,” he said. “Bitcoin has entered price discovery, with no resistance in sight, and every Bitcoin investor ever now being profitable.”
Of course, the path forward will not be completely linear: “while 20 percent to 30 percent pull-backs are to be expected, and are a common-place in crypto in cycles of parabolic rise,” Ehrlich said.
However, “what’s often not accounted for is the plethora of institutions, public companies, and retail investors on the sidelines looking to buy up every dip which presents itself to lock in their positions.”
“At Voyager, we firmly believe Bitcoin breaking through its all-time high of 2017, sets up a new macro-trend. Bitcoin is such a scarce asset, it is experiencing a supply-shock, where there is simply not enough Bitcoin to satisfy the Global demand. These fundamental economics can easily sky-rocket Bitcoin further.”
What are your thoughts on where Bitcoin is headed in 2021? Let us know in the comments below. Special thanks to Miko Matsumura, Alex Mashinsky, Zac Prince, Kadan Stadelmann, Steve Ehrlich, Michale Sonnenschein and to everyone who submitted pitches for this piece. Happy holidays!