Will Bitcoin reach $100,000?
Many experts claim that Bitcoin is on its way to breaking the $100,000 mark, although opinions differ on when exactly this will happen.
Volatility is nothing new, and this is an important reason why experts say that new cryptocurrency investors should be extremely careful when allocating any part of their portfolio to cryptocurrencies.
According to Coinmarketrate.com over the years, Bitcoin has grown in price as steadily as any other cryptocurrency on the market. It is quite reasonable that investors are interested in how high it can rise.
Unfortunately, the price of Bitcoin is extremely difficult to predict, and it is even more sensitive to market factors than more established asset classes. But we decided to ask several experts to give us their best estimates. That’s what they said:
Conservative Bitcoin price forecasts show that the cryptocurrency will reach $100,000 by 2023.
Some experts are more optimistic. “The most knowledgeable experts in this field predict $100,000 in the first quarter of 2022 or earlier,” says Kate Waltman, a New York-based CPA specializing in cryptocurrencies.
Others do not want to name the number and date, but instead point to the trend of value growth over time. Investors should expect a “fairly steady” growth in the value of Bitcoin in the long term, due to organic market movements, with the prospect of reaching the $100k mark, Jurrien Timmer, director of global macroeconomics at Fidelity Investments, predicted last month.
“What I expect from the BTC is short-term volatility, and long-term growth,” says Kiana Danial, founder of Invest Diva, and author of the book “Cryptocurrency Investing For Dummies”.
Unsurprisingly, you will find a wide range of opinions and predictions about how high Bitcoin will rise (and when) from well-known cryptocurrency investors, evangelicals and public commentators.
What affects the price of Bitcoin
The price of cryptocurrencies, like any other currency or investment, is influenced by the usual economic factors: supply and demand, public sentiment, news cycle, market events, scarcity, etc.
As a new and developing asset, there are additional factors that affect the value of Bitcoin more than the average currency or security. These include:
Currently, there are only 18-19 million BTC in circulation, and the issue will stop at 21 million. Industry experts constantly point out that this internal shortage is one of the main attractive features of cryptocurrencies.
“Supply is fixed, but demand is growing,” says Alexis Johnson, president of Light Node Media, a company specializing in PR and blockchain-related events.
Other experts point out that Bitcoin has value because people attach value to it. “That’s why everyone buys, because of the psychological aspect,” says Nelson Merchant, co-founder of Light Node Media for Johnson. This may make it difficult for the average consumer to determine the legality of Bitcoin and other cryptocurrencies. The concept of supply and demand only works when people want something rare, even if it didn’t exist before.
“In fact, it almost looks like a scam,” says Merchant about the origin of the VTS. According to him, since he started investing in 2017, his cryptocurrency assets have sometimes reached millions, but he has also seen them disappear instantly.
“I really believe that if the money is not in cash, then it means you don’t have it. Why? Yes, because in cryptocurrency everything can fall sharply overnight,” says Merchant. “That’s why certified financial planners advise allocating only 1-5% of your portfolio to cryptocurrencies to protect your money from volatility.”
One of the main factors in the growth of the Bitcoin price is the speed with which new consumers buy and study cryptocurrencies, explains Waltman.
“Cryptocurrency technologies are being mastered faster than people first mastered Internet technologies,” she says.
“Assuming this continues, the cumulative acceleration in the number of new adoptions may continue to push the cost of military-technical cooperation higher and higher.”
According to the digital asset management company CoinShares, the annual growth in popularity of Bitcoin is 113%. If people get used to Bitcoin at a speed comparable to the first days of the Internet (or faster), then, according to the report, by 2024 the number of users will be 1 billion, and by 2030 – 4 billion.
Last month, CoinDesk reported that the number of new wallets worldwide increased by 45% between January 2020 and January 2021, reaching approximately 66 million. The popular cryptocurrency exchange Coinbase claims that it now has more than 73 million users worldwide, and the Gemini exchange recently published a report “The state of cryptocurrencies in the United States”, which showed that 21.2 million Americans own cryptocurrencies in one form or another.
In recent months, federal officials have made it clear that they are paying attention to the cryptocurrency sector. President Joe Biden recently signed an infrastructure bill obliging all cryptocurrency exchanges to report their transactions to the tax service. Similarly, Treasury Secretary Janet Yellen recently stated that stablecoins, a type of cryptocurrency pegged to the value of the US dollar, should be under federal supervision.
The conversation about regulatory policy is “uneven,” according to an industry document published by Flourish, a fintech platform designed for investment advisors. For such a relatively new asset class as cryptocurrencies, any new regulation can affect the value and, in turn, the portfolios of investors.
For example, when China banned cryptocurrencies in September 2021, investors saw a drop in the price of BTC, although it has since recovered, and returned to its usual volatility. Although the precedent for Bitcoin has been around for a decade, the Securities and Exchange Commission makes all decisions on a case-by-case basis, which experts call the “crawl, walk, run” strategy on the way to the adoption of cryptocurrencies.
“Regulation has kind of evolved over the last five years”, says Ben Cruikshank, Flourish’s CEO. “Regulators can always change their minds”.
Finally, another important factor affecting the price of Bitcoin is the cycle known as halving. This is a complex and algorithmic process, but, in fact, halving is a step in the process of coin mining, as a result of which the reward for Bitcoin mining is halved.
Halving affects the rate at which new coins enter circulation, which may affect the value of existing Bitcoin reserves. Historically, halving correlates with boom and bust cycles. Some experts try to predict these cycles until the day after the event ends.
As with any other investment, financial planners and other experts advise not to let the fluctuations in the price of BTC push you to make emotional decisions. Research has shown that investors who regularly contribute to passive index funds and ETFs show better results in the long run, thanks to a strategy called “dollar cost averaging”.
This is one of the reasons why experts recommend investing in cryptocurrencies no more than 5% of the total portfolio, and never investing at the expense of savings in case of emergencies and paying off debts at high interest rates. The path to long-term wealth and saving for retirement is most often successful for people with diversified investments.
According to experts, it makes sense to use the “put and forget” approach, or staking. “Passive investing is a very valuable way to achieve financial goals,” says Sarah Catherine Gutierrez, a certified financial planner from Arkansas.
Since cryptocurrencies are still a novelty for most people, you can use these approaches and see how events will develop. We only have about 10 years of data confirming the price forecasts for cryptocurrencies, and the value of Bitcoin, although growing in the long term, is very volatile from day to day.