Bitcoin was once a victim of the most underrated skepticism by some economists and it is now the world’s most popular cryptocurrency that is estimated to continue its race until the end of 2021 with its price surging up to $50,000 per coin.
According to some media reports, the crypto which touched its highest record of $19,860, breaking its 2017 achievement of $19,783, is projected to continue this tendency up to 2021, with macroeconomic, technical and demand versus supply indicators supportive of $50,000 target resistance, implying about a $1 trillion market capitalization.
This extremely optimistic outlook for the digital currency comes amid intense comments made by renowned economists including Nouriel Roubini, who predicted the global financial crisis of 2008. “It has no intrinsic value, it is not backed by any asset, it is not legal tender, it cannot be used to pay taxes,” said Mr. Roubini.
When compared to traditional means like stocks, bonds, real estate and other income-generating assets, there’s no inherent value to be found in Bitcoin, stated Mr. Roubini. Further, the crypto exchanges were also punctured with some trading malpractices, like pump and dump (P&D), which is a form of securities fraud.
Mr. Gary Cohn, who is the former president and chief operating officer of Goldman Sachs, a global investment bank, says that Bitcoin is potentially a developing asset class. “And for all the reasons it’s a strong developing asset class, it may fail.”
Mr. Cohn says that the bitcoin system is not at all transparent. So it brings a question in people’s mind that why would they need a system that does not conduct a proper audit trail and which does not have integrity. People exactly do not know who owns it or how much exists today.
According to experts, the demand-supply chain is currently skewed bullish, as only 900 new coins are mined each day when compared to 2017 when 1800 were drawn out and institutional participation is increasing.
The analysts say that assets under management at Grayscale Bitcoin Trust recently ruptured the $10 billion level, having begun the year at $2 billion. The trust has bought about 70 percent of new bitcoins mined since May, when the cryptocurrency underwent its third reward halving.
As per data source Skew, open interest in the bitcoin futures listed on the Chicago Mercantile Exchange has surged above $1 billion for the first time on record compared with closer to $120 million in 2019.
Experts expect to see these trends continue in 2021 as major central banks and governments are unlikely to lower their inflation-boosting stimulus programs anytime soon. The unconventional policies opted by the regulators to curb the pandemic driven economic slowdown is the major reason to boost demand for bitcoin and gold this year.