What experts are predicting for Bitcoin prices in 2021
Last year was a wild ride for people invested in Bitcoin and those watching the market. As of December 2020, the cryptocurrency giant traded at over $23,000.
When the United States began wrestling COVID-19 back in March 2020, Bitcoin was trading below $4,000. For those who sold and those who held their Bitcoin, it is a gut-twist source of losses and gains. For those watching the market from the sidelines, it is an entertaining and exciting market show with touches of dizziness and jealousy.
Despite the incredible fluctuations in the price of Bitcoin, its market trend is in an upward direction. Although the cryptocurrency has been trading for decades, 2020 seems to have been its year of maturity. This article explores some of the predictions for Bitcoin price in 2021.
Bitcoin will close in the hundreds of thousands
The current price of Bitcoin is $50,713.20, and experts are predicting that the price will continue to soar throughout the course of the year. Different Bitcoin gurus seem to have different predictions on the closing price of Bitcoin come December 2021.
However, they all seem to agree on one thing; Bitcoin will be trading at over $100,000 by the end of the year. The prediction range lies between $100,00 and $500,000 by the end of 2021. Proponents of the conservative prediction believe the price will not go up instantaneously due to institutional interests and fund flows.
Continued volatility
Since the price of Bitcoin is not tied directly to a real-world phenomenon like monetary or fiscal policies, it can depreciate or appreciate in an unpredictable manner. For people who want to control big losses, like is the case in mutual funds, this is not the investment for you.
Last year, it was predicted that Bitcoin could reach $50,000 in 2021, and has this come to fulfillment? Absolutely, but could it go south or in the opposite direction? Absolutely. The high volatility in Bitcoin prices results in uncertainty, and investors have to find a way around this downside.
The price of Bitcoin is currently bullish, but that does not mean it cannot go bearish. Since nothing is certain in this industry, you can expect another wild ride in 2021 – buckle up!
Competition from central banks
According to a report issued by the Bank of International Settlements, 80 percent of the Central Banks across the globe are working on incorporating a digital currency. China is ahead of the pack with digital currency experiments.
A lottery held in Suzhou saw a hundred thousand residents receive 200 renminbi, which is equivalent to $30 each via digital wallets. These residents were requested to link the digital wallets to their bank accounts and spend the digital money with a limited timeframe, or else it expires.
China is slowly moving towards national adoption of the digital yuan, and this will likely drop the demand for Bitcoin and other cryptocurrencies. When other countries take China’s approach, the demand for Bitcoin will drop, and in turn, the price will take a bearish trend.
Escalation of tax enforcement
The IRS has been making moves to show how serious cryptocurrency tax enforcement will be implemented moving forward. Taxes are not exclusive to the United States alone, and with the popularity of the crypto world going over the roof, we are expecting that tax agencies across the world will soon realize the potential of this new potential revenue stream.
With the taxation of cryptocurrencies, many people might be discouraged from investing in the industry, hence lowering the demand for cryptos.
Increased mainstream acceptance
Previously, the use of Bitcoin for everyday transactions was not possible because not many businesses accepted this form of payment. However, 2020 witnessed a great evolution of crypto adoption, with prominent fintech companies allowing users to sell and buy bitcoin. This gave Bitcoin a standing approval.
In 2021, we are expecting an extension of the mainstream adoption of Bitcoin. We are typically looking forward to at least one European or American bank introducing a system through which customers can buy Bitcoin or hold digital assets. This will see the price of Bitcoin increase.
Stable coins are taking the lead
Regardless of the focus on Bitcoin as the leading crypto, stablecoins are gradually becoming an option of interest with more people adopting them. With insane market capitalization and their purpose as a bridge for payment processors, the mass adoption of stable coins is a potential threat to Bitcoin.
