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Bitcoin at $100,000, a likely scenario that would collapse the global financial system

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Aakash started in Nov 2018 as a writer at Revyuh.com. Since joining, as writer, he is mainly responsible for Software, Science, programming, system administration and the Technology ecosystem, but due to his versatility he is used for everything possible. He writes about topics ranging from AI to hardware to games, stands in front of and behind the camera, creates creative product images and much more. He is a trained IT systems engineer and has studied computer science. By the way, he is enthusiastic about his own small projects in game development, hardware-handicraft, digital art, gaming and music. Email: aakash (at) revyuh (dot) com

Bitcoin investors are betting that the value of this virtual currency could rise to fivefold to $100,000 per unit within a year. This forecast attracts the attention of skeptical analysts who believe that volatile cryptocurrency is a speculative asset, more than valuable gold.

Since January 2020, the price of bitcoin has risen 160%, bolstered by strong institutional demand, in addition to tight supply. The price of bitcoin surpassed the $ 19,000 mark on November 24 for the first time since December 2017, according to data from Binance, the largest cryptocurrency market.

Some experts believe that the current positive dynamics of the price of bitcoin is due to a series of factors.

According to the experts, the global political and economic transformations associated with the arrival of Donald Trump to power in the United States in 2016 shook the foundations of politics and the economy of the previous decades. And the current confusion around the results of the 2020 elections increases even more tension.

Going from $ 18,000 to $ 100,000 in a year is not an exaggeration but a more than a viable outcome, warns Brian Estes, one of the executives of the hedge fund Off the Chain Capital.

“I have seen bitcoin multiplying by 10, 20 and 30 in a year. So going up 5 times its value is not a big deal,” Estes said in a conversation with Reuters.

The expert predicts that the price of the cryptocurrency could be between $ 100,000 and $ 288,000 by the end of 2021, according to a model that measures the relationship between reserves and capital flow and that takes into account the shortage of raw materials such as gold.

Lennard Neo, one of the directors of the company Stack Funds, predicts that in the future there will be a barrage of retail demand for bitcoin. This cryptocurrency, according to his forecast, will be between $ 60,000 and $ 80,000 by the end of 2021.

For his part, the technical analyst of the largest financial services company Citi, Tom Fitzpatrick, predicted that bitcoin could rise to $ 318,000 by the end of 2021. The cryptocurrency would show such promising dynamics thanks to the following factors:

  • its limited offer;
  • how easy it is to move across borders;
  • the opacity that surrounds owning such an asset.

Why is it wrong to bet on bitcoin?

Despite all these promising forecasts, there are experts who show some skepticism regarding the dynamics of bitcoin prices. One of them is Juan Pérez, a broker for the Tempus company, who assured that all the positive omens about bitcoin represent a type of bet on the collapse of the global financial system.

“Governments around the world won’t let that happen. They will not let fiat currencies collapse just like that,” Perez added, quoted by Reuters.

Toronto-based independent broker Kevin Muir emphasizes that any mathematical model developed by a hedge fund for bitcoin “is rubbish.” Nobody can model a hobby, according to the expert. “Is it plausible? For sure. It’s a mania. But does anyone actually have a clue? Not a chance,” he stressed.

Bitcoin, which debuted in 2011, uses technology based on so-called ‘mining computers’. These devices validate blocks of transactions in a competition to solve math puzzles every 10 minutes. The first to do so is paid with new bitcoins. 

This technology was designed in such a way that the miners’ reward is reduced every four years. It has been devised with the aim of curbing the inflation of the respective assets. In May 2020, bitcoin experienced another reduction that limited its offer in the market. And this decline is what has caused its price to skyrocket, although it has not been the only factor, the agency writes. 

Recently the payment services Cash App and PayPal launched an encryption service for more than 300 million users who have collected all the new bitcoins. As a result, its launch has caused a shortage of this asset and has boosted the race in recent weeks.

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