How high can bitcoin fly in the ongoing bull race? This is a question on the minds of traders after the price of the cryptocurrency quintupled since October.
Bloomberg Bitcoin (BTC) analysts say the price could climb to as high as $ 400,000 this year, from around $ 56,000 now. The ultra-bullish prediction is based on how Bitcoin performed during the bullish races of 2017 and 2013.
“Our chart shows bitcoin on similar ground to the gain of around 55x in 2013 and 15x in 2017,” Bloomberg Crypto noted in a monthly report released this week. “To achieve extreme prices similar to those of those years in 2021, crypto would approach $ 400,000, based on the regression from the peak of 2011.”
While past performance is no guarantee of future results, history can rhyme. The latest bull run comes in the wake of last May’s reward halving on the Bitcoin blockchain – an automatic 50% reduction, every four years, in the pace of new issuance of cryptocurrency units.
Bitcoin saw staggering gains in the 12-18 months following the previous rewards halving in November 2012 and July 2016.
“The year after a supply cut (halving) is what 2021 has in common with 2017 and 2013, with moderate volatility,” Bloomberg Bitcoin analysts wrote, adding that the peak of December 2017 represented a 50-fold increase over the observed average price. in October 2015, when 180-day volatility hit its lowest lifetime.
The long-term volatility gauge almost revisited the record low of September 2020, analysts noted. Bitcoin cost on average around $ 11,000 that month.
Some observers worry that a faster rise in bond yields could dilute the appeal of inflation hedges such as gold and bitcoin, pushing their prices lower.
However, Bloomberg analysts predict that bitcoin will remain relatively resilient in a rising yield environment.
“Rising real yields are a headwind for gold prices, but less so for bitcoin, still in its price discovery phase,” analysts noted. “Gold is fighting a battle against bitcoin, which can gain 6% to 8% in crypto savings accounts and is poised to become a global reserve asset in a digital world.”
The cryptocurrency fell 20% in the last week of February after the 10-year U.S. Treasury yield hit 12-month highs above 1.5%. The yield has continued to rise since then and recently hit a 14-month high of 1.77%. The bitcoin market, meanwhile, held up.
According to the report, the steep discount seen recently in the Grayscale Bitcoin Trust (GBTC), a popular investment vehicle, is a result of heightened expectations that the United States will eventually approve a Bitcoin exchange-traded fund. GBTC still maintains its 50-day average support, which has won over buyers in the past. (Grayscale is owned by Digital Currency Group, which also owns CoinDesk.)