At $6,200, where the cryptocurrency trades as of the time of this article’s writing, Bitcoin is far below $20,000, its December 2017 all-time high.
It’s even lower than $50,000 — a price that a leading investor says BTC could reach in a relatively short period of time. Here’s why he thinks so.
Bitcoin Could Hit $50,000
Su Zhu — CIO and CEO of hedge fund Three Arrows Capital — recently remarked that Bitcoin could rally to $50,000 “relatively quickly,” 700% higher than the current price.
As to why he thinks such explosive growth can take place in such a short amount of time, the investor looked to the fact that several emerging markets are “now pricing in significant risk of sovereign defaults.”
Su Zhu added that the U.S. dollar is currently set on a course for inflation “it will be hard to turn back from,” which has been corroborated by trends in the bond market.
All this gives the decentralized and disinflationary Bitcoin, which many analysts have deemed a “safe haven” from inflation and collapsing fiat currencies, a chance to shine.
It’s important to point out that Su Zhu has been rather accurate in calling price action in the crypto markets over the past few months.
Namely, when investors were expecting Bitcoin to fall to fresh lows during December’s crash to $6,400, he proposed that BTC would rally over 20% to surpass $9,000 by the end of January.
While many were first skeptical of this call, the cryptocurrency did exactly that, rallying to that price point and slightly higher by the end of the month, surprising a majority of crypto investors.
It’s Happening
What’s especially crazy about his prediction is that it all comes faster than he expected; due to the ongoing coronavirus outbreak, central banks and governments have been forced to enact dramatic and historic measures to try and keep the economy afloat, proving Bitcoin.
After cutting its policy interest rate by 1.5% in a matter of a month, implementing the fourth phase of quantitative easing, and reducing reserve requirements to zero (meaning banks don’t need to hold any of your money), the United States Federal Reserve is announcing even more dramatic measures.
Announced Monday morning, the Federal Reserve will be implementing a series of programs to “support smooth market functioning and effective transmission of monetary policy to broader financial conditions and the economy.”
These programs include the purchasing of corporate debt, Treasuries, and mortgage-backed securities until the economy normalizes again.
While the word “infinite” was not mentioned in the Federal Reserve’s press package on this news, many economists and analysts have dubbed these measures “QE Infinity,” as the central bank has seemingly put no limit on how many assets it can buy in the foreseeable future.
All this stimulus, BitMEX’s research team says, is only a catalyst for inflation, further corroborating Su Zhu’s comment. In their report, BitMEX wrote:
Where the Bitcoin price may shine is in the volatile inflationary aftermath of the response to the crash. In our view, in this changed economic regime, where the economy and financial markets are set loose, with no significant anchor at all, not even inflation targeting, it could be the biggest opportunity Bitcoin has seen, in its short lifetime.
Indeed, with gold and BTC both rallying strongly off this latest Federal Reserve news, there’s a good chance they may differentiate themselves from the tanking equities markets as monetary policy leans towards debasement, proving the value of scarce assets.
