Does bitcoin have a bright future and can it still experience parabolic increases? In this text I will try to answer this question!
Bitcoin has potential!
Ark Invest’s 2020 Bitcoin report will help me partially in my analysis. Analysts wrote it when one bitcoin cost approximately USD 10,000 (with a market capitalization of USD 220 billion). In their opinion, between 2025 and 2029, one coin would be worth as much as USD 150,000. This means – in an optimistic scenario – at this time next year, 1 BTC will cost over 100% more than now.
But what can make BTC so expensive? Ark assumed that Bitcoin would effectively become a global settlement network, i.e. something more than just digital gold. It’s not the case today, but cryptocurrency has potential. After all, it works 24 hours a day, globally, without the need for intermediaries. It also prevents the introduction of sanctions, which many entities in the world probably like (and some – those of the US government – will reject).
Another big company, VanEck, is also bullish on BTC. She also sees potential in global international trade, the total value of which is estimated at approximately USD 44 trillion per year. The use of bitcoin in this market would have to increase its price. If the Bitcoin network captured just 10% of the global cross-border market, it could transfer approximately $4 trillion annually! This could somehow put this network on par with the Visa and Mastercard networks.
Additionally, cryptocurrency, as we know, is a safe haven from inflation: its value increases in the long term. The gold market is currently growing strongly, maybe in a few months we will see the rate of USD 3,000 per 1 ounce. However, when overheating occurs in this field, capital will “overflow”, among others. to bitcoin, which will further increase its value.
We cannot forget about BTC ETFs, which can also “pump” the BTC price during a boom – they are an additional gateway for capital to this market. The results are already impressive.
It is worth noting that this may be just the beginning, as suggested by historical data regarding gold ETFs.
Fed policy
The next piece of the puzzle is Fed policy. The US central bank has begun a cycle of interest rate cuts, which is releasing liquidity in the markets. The latter will be released on the cryptocurrency market (of course not 100%), which will fuel growth. It is worth adding that we are only at the beginning of this cycle – after the first reduction in interest rates after a break of several years!
All this may be compounded by a bitcoin supply shock – there are fewer and fewer coins on the coin exchanges, and with the growing demand, the price may rise significantly.
Summary: a mega cycle ahead of us?
So are there big gains ahead of us? We don’t know that. First of all, we don’t know whether they will take place in this cycle. In the long term, however, the factors indicated above may lead to a jump in the BTC price by several hundred percent (from the current level).
The text does not constitute investment advice.
You can buy Bitcoin and other cryptocurrencies in a simple and safe way on the zondacrypto exchange.
