The beginning of 2021 was marked by yet another record for bitcoin. According to CoinDesk, the website which tracks the cost of cryptocurrencies on different exchanges, the exchange rate of the world’s main cryptocurrency passed an important psychological milestone of 30 thousand US dollars on January 2, 2021.
The bitcoin rate skyrocketed by 12% on the very first trading day on January 2. Furthermore, it had already exceeded the $33,000 mark by the end of the day.
However, it was not the end of the whole story. Next day, on January 3, the price of bitcoin has exceeded $34,000 for the first time in the history. Such a rate was shown by the Coinmarketcap website based on data from twenty exchange platforms where the cryptocurrency is traded. That’s almost a fivefold growth during a year, since Bitcoin started its growth from $7,000 at the beginning of 2020.
The reasons for the bitcoin growth
The bitcoin exchange rate began to rise in March 2020 based on the news regarding the coronavirus pandemic as well as the fall in oil prices. The growth accelerated sharply at the end of October, when the Paypal payment service announced its readiness to work with cryptocurrencies and informed it would accept them as the means of payment in 2021. In mid-December, the bitcoin rate surpassed the mark of $20,000, which it last approached in 2017.
At the same time, some experts believe that a correction in the bitcoin exchange rate may occur in the nearest future. Namely, the analysts from Token Metrics considered bitcoin could fall in price by $14,000.
PlanB, a cryptoanalyst from the Netherlands, believes the value of bitcoin will increase next year. It predicts an increase by 10 and even 20 times.
PlanB is known as a developer of the stock-to-flow technology which is currently one of the most popular bitcoin valuation models. It is based on the ratio between the reserves and new investments.
He expressed his opinion on the future of the crypto market in an interview to SALT Talks. According to the Dutch investor, the price of one token can reach $300,000.
Looking at the trajectory of what we had over the last 10 years, it makes sense to expect the value of bitcoin increasing 10x or 20x. Thus, by Christmas 2021, it will reach the mark of $100,000 or maybe $300,000.
PlanB acknowledges its prediction may be too positive, but he also noted that the value of bitcoin has tripled during the year and would continue to increase.
The analyst considers the bitcoin supply shortage and fixed emission combined with the regular halving are the main catalysts for the bitcoin’s price increase. Scarce assets are more valuable than those in abundance. Nowadays, Bitcoin is an absolutely scarce asset. One can’t change the bitcoin supply even if its price drops. This is mathematically programmed in the code and that’s unique, the cryptoanalyst admits.
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