While the price of Bitcoin is not yet past the previous all-time high of $20,000, investors have recently started to wonder where the next cryptocurrency bull cycle will take the asset.
Some bears have said that the ongoing recovery is but an “echo bubble,” which will see the cryptocurrency’s strength taper out in the coming weeks, resulting in a fresh bear market that will take prices to the lowest they’ve been in years.
Case in point, a prominent analyst hailing from institutional markets in Europe recently threw his weight behind a prediction that Bitcoin will trade at least as high as $100,000 by the end of 2021 — just under 24 months away.
Should this happen, BTC will need to rally by 880% in 23 months at the most, a feat not impossible though improbable when you consider the relative measly gains of the stock market and other asset classes.
Bitcoin Likely to Reach $100,000, Top Analyst Concludes
If you’ve been in the cryptocurrency space at all over the past few years, you’ve likely heard the online moniker “PlanB” tossed about quite often.
For those unaware, PlanB, whose Twitter tag is “100trillionUSD” in seeming reference to the unfortunate monetary trend in the hyperinflation of fiat currencies, has become a leading analyst in Bitcoin, having released a number of digital works that have been accurate in forecasting the seemingly random movements of the cryptocurrency market.
The most famous piece of his is “Modeling Bitcoin’s Value with Scarcity,” a Medium post he published in March of last year in which he revealed that Bitcoin’s scarcity can help predict the asset’s market capitalization, creating a logarithmic regression model to do so. Whenever Bitcoin’s inflation rate decreases, its fair value rises due to market dynamics.
His model — which has been backed tested to an R squared of 95% (which means extremely accurate in statistics) and confirmed to be cointegrated with BTC’s price (rather than a coincidence) — predicts the “fair” price of Bitcoin will reach somewhere from $55,000 to $100,000 after May 2020’s halving, during which the inflation of the asset will be cut in half due to code built into the blockchain.
PlanB recently built a price forecast off this model. In a tweet, he wrote that Bitcoin will likely trade above $8,200 throughout all of this year, adding that the “bull run will start after the halving [and prices will] top $100,000 by before December 2021.”
*** Update: my 2 sats on #bitcoin price:
– 2020: btc stays above $8200 (so we are NOT dropping to $6k or $4k levels that others are predicting now)
– May 2020 halving: will be above $10k
– 2021: bull run starts after the halving and tops $100k before Dec 2021#NotFinancialAdvice https://t.co/Zkkma4ZBSd
— PlanB (@100trillionUSD) February 10, 2020
Not as Crazy as It May Sound
As crazy as a $100,000 Bitcoin price may sound, many have rationalized this price prediction.
PlanB, for instance, wrote the following in his aforementioned magnum opus, accentuating how fast Bitcoin can grow when economic value floods into this ecosystem from the world’s investors due to macro factors:
People ask me where all the money needed for $1trn bitcoin market value would come from? My answer: silver, gold, countries with negative interest rate (Europe, Japan, US soon), countries with predatory governments (Venezuela, China, Iran, Turkey etc), billionaires and millionaires hedging against quantitative easing (QE), and institutional investors discovering the best performing asset of last 10 yrs.
Indeed, in a recent CNBC “Fast Money” segment, all the hosts on the panel — some of which were skeptical on Bitcoin and on cryptocurrencies as a whole over the past few years — admitted that Bitcoin could grow rapidly due to macro factors building on the horizon. For instance, one of the anchors said:
In a world where central bankers are tripping over themselves to devalue their currency, Bitcoin wins. In a world of fiat currencies, Bitcoin is the victor.
This was in reference to the trend of central banks around the world lowering their policy rates and injecting money into the economy (through effective borrowing) to sustain positive economic trends, at the expense of the purchasing power of their respective currencies.