Bitcoin is cruising on its best speed in almost three years to a high record that beats expectations. After months of disappointing performances, the digital gold is finally living up to the name.
For the first time since December 2017, the cryptocurrency has hit over $18,000, and it’s poised to experience further surge.
Citibank executive, Tom Fitzpatrick said bitcoin will trade at $318,000 by the end of 2021. Though as he admitted, the prediction seems improbable, but there is a new wave of investor interest to drive the surge.
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Fizpatrick said the surge will be the weakest rally for the digital asset when compared to other assets such as gold. In his argument, bitcoin is all about the “unthinkable rallies followed by painful corrections,” which means, it will likely see huge price swings before finally settling at the predicted price.
The momentous rise has been attributed to key two reasons. Long time trader Peter Brandt explained: First, during previous bull cycles, BTC saw up to nine corrections. But in the ongoing rally, BTC has seen merely two 10% corrections. Second, bitcoin has consistently recovered from areas where corrections were expected, such as on Nov. 16 when it hit $14,774 on Binance.
Since the bitcoin halving in May, the digital coin has been relentlessly trying to prove its worth to investors looking for a safe haven from the pandemic’s economic storm.
Demand for its perceived quality as an inflation hedge and expectations of mainstream acceptance have become other factors aside corrections, driving its rally.
The coin continues to trend higher
Bitcoin has soared 160% this year, and has surged 17% in the last three days alone.
Investors expect the cryptocurrency to reach its all-time high, the $20,000 2017 peak in December.
“It is not out of the question for the crypto to hit its all-time high of $20,000 this side of Christmas,” said Simon Peters, analyst at investment platform eToro. “The crypto industry has consolidated, matured and is seeing real traction with institutional investors. Investors are using bitcoin as an inflationary hedge to combat the prospect of continued government stimulus.”
One of bitcoin’s new enthusiasts, the CEO of Twitter and Square who invested $50 million in the in the digital currency last month has made $34 million in paper profits as the coin surges unprecedentedly.
Dorsey used Square to purchase 4,709 bitcoins, for an average price of $10,618 in a single day, amounting to $50 million, a move he’s made to get Square exposed more to the crypto coin.
Other millionaire investors had lined up behind the popular coin as the US elections presented uncertainties, amidst the surge in COVID-19 cases and wait for possible vaccines.
The number of people touting bitcoin as the new gold is increasing. MicroStrategy CEO Michael Saylor, whose software company recently purchased $425 million worth in bitcoin told CoinDesk that macroeconomy is in chaos and bitcoin has taken the lead over gold as a safe haven commodity.
“Hoarding gold is an antiquated approach to storing value, bitcoin is a million times better,” he said.
Saylor said gold miners are working hard to destroy the commodity by hoarding it, hoping to create artificial scarcity that will push the price up, because that poses a bigger problem for the gold industry.
He said there is little basis to trust in fiat also; citing one analyst’s prediction that Federal Reserve action will keep equities moving upward regardless of the recent election’s outcome, Saylor said the “most aggressive monetary expansion” is probably ahead, and warned that he sees fiat currency crumbling.
“Investors will therefore likely continue treating blue-chip juggernauts from Apple to Amazon as new kind of safe haven. They’re desperately grasping at straws. All those assets are reliant on the fiat currency I see as crumbling away,” he said.
However, many investors are still skeptical about bitcoin, not all agree the recent surge is sustainable. Those who had bad experiences in the past are wary that a repeat of the post 2017 decline may happen.
Billionaire investor Ray Dalio listed 3 reasons why he isn’t moved by the surge, and will likely never throw a dime into bitcoin. The Bridgewater Associates founder said in tweets on Tuesday that bitcoin is too volatile for merchants, although he admitted he might be missing something.