Since its inception, there has been no shortage of crazy predictions in the encryption field. Computer scientist Hal Finney even guessed in an early conversation with the founder of Bitcoin that if Bitcoin absorbs all the wealth of the world, the price of each Bitcoin will reach 10 million US dollars.
Social Capital founder Chamath Palihapitiya bought Bitcoin at a price of 100 US dollars in the early days. He believes that Bitcoin will rise to 100,000 US dollars in the next 3-4 years, and predicts that the valuation will reach 1 million US dollars by 2037. "Bitcoin is a wonderful hedging and value storage method to deal with authoritarian regimes and banking infrastructure. We all know how these infrastructures corrupt the normal operation of the world." His famous saying.
Although these predictions seem attractive, but what about these predictions? How much is Bitcoin worth? What can we expect from the price?
Absorb global wealth
Although Hal Finney's prediction may be extreme, the idea that Bitcoin will "absorb wealth" is entirely reasonable. The only way for its value to rise is for investors to buy Bitcoin in exchange for something else-ultimately cash.
And if we can say something about the cash in 2021, it is that it is in big trouble. This is not only based on the view that banknotes will help spread covid-19 and receive negative attention, but also because the value of fiat currencies is declining as governments have been printing currency to support the economy.
Traditionally, when the economy is under siege, investors will flee to gold, but we live in an unconventional era. The stock market has performed well, and more and more investors are no longer choosing gold, but turning to Bitcoin.
This tells us that when we look at Bitcoin now, it is likely to be a long-term process. Even if the economic situation is good, the fiat currency will still be under downward pressure.
But to what extent Bitcoin will absorb global wealth, we cannot say clearly. A strategist at JPMorgan Chase wrote that the value of Bitcoin could be as high as $146,000. He believes that there are approximately US$2.7 trillion in "private gold" in the world, excluding gold held by the central bank. At the same time, the value of all bitcoins in circulation is about 57.5 billion U.S. dollars. He wrote that the market value of Bitcoin "must now rise 4.6 times from here, which means that the theoretical price of Bitcoin is $146,000 to match the total amount of gold invested by private investors through ETFs or gold bars and gold coins. "
The future of Bitcoin
We believe that these forecasts are possible, but in our assessment of the next year, taking into account the potential for further corrections this year, we have arrived at a relatively moderate forecast.
In 2021, we predict that the price of Bitcoin will be $55,000, and it is likely to reach it in the first quarter of 2021. We expect this year's closing price to be between $36,000 and $55,000. More relevant information can be found in our recent Bitcoin research report.
The value of Bitcoin in the future depends entirely on how people agree with the view that Bitcoin is the safest place, because the legal currency and traditional gold markets have collapsed. This idea has been repeatedly verified in the crypto community, and now we finally see that institutions are also awakened.
The next stop for Bitcoin is mainstream mass adoption, which is also something we will be focusing on in the coming weeks.