2020 has been life-changing for the global economy along with alternative investments. While the world was reeling with coronavirus, bitcoin managed to recover almost all its value that was lost in 2018. It is the only alternative investment that has outperformed traditional investments including gold and equity market.
Since January, bitcoin has gained 160 percent, bolstered by strong institutional demand and scarcity as payment companies such as Square and Paypal bought it on behalf of customers.
Meanwhile, gold prices rose to Rs 49,000 in November from Rs 39,808 in January. The prices, in fact, climbed to its all-time high of Rs 56,000 in August but later began to retrieve as developments on vaccine bolstered hopes of a swift economy. The metal stopped being overbought and is moving toward a more balanced ratio between buyers and sellers.
However, bitcoin doesn’t work the same way as gold. It has its own trajectory and refuses to follow any path, hence it continues to remain as the most volatile currency.
Bitcoin’s rally this year proves that the traders want to relive the past glory of the cryptocurrency experienced last in 2017. Despite coronavirus crippling the global economy and equity markets, bitcoins continued to run past all.
The three events that remained crucial for Bitcoin from just rising to mooning: Square’s purchase of $50 million in BTC, Joe Biden’s presidential win and PayPal’s support for crypto operations.
Around the times of these three events, the bullish channel became steeper- almost resembling 2017. If Bitcoin continues to remain in this channel, then it could reach a new all-time high before 2020 ends.
Brian Estes, chief investment officer at hedge fund Off the Chain Capital predicts bitcoin could hit between $100,000 and $288,000 by end-2021, based on a model that utilizes the stock-to-flow ratio measuring the scarcity of commodities like gold. That model, he said, has a 94 percent correlation with the price of bitcoin.
Citi technical analyst Tom Fitzpatrick said in a note last week that bitcoin could climb as high as $318,000 by the end of next year, citing its limited supply, ease of movement across borders, and opaque ownership.