Bitcoin price forecasts: $100,00 by end of 2021?​

JP Morgan has adjusted its short- and long-term price targets for bitcoin.  Comments from their research team suggest that a recent decline in the gold price toward $1,700 per ounce will adversely affect the price of bitcoin in the near and long term.  Given their previous suggestion of $146,000 as a fair long-term bitcoin price, the bank has now revised that down to $130,000, using an equivalent portfolio weighting of gold vs bitcoin assuming bitcoin volatility decreases to converge with that of gold.  They note this will be a multi-year process and suggest that near-term a price target of $65,000 is more realistic.

As more and more investors buy bitcoin with gold, we must also take into account the wider contextual changes that are driving this change in portfolio weighting in favour of bitcoin.  In recent weeks we have seen the biggest investment banks all acknowledge bitcoin as a legitimate global currency, with Deutsche Bank claiming bitcoin is “too important to ignore”, Citi noting bitcoin is “at the tipping point of mainstream acceptance” and Goldman declaring there is a “phenomenal amount of institutional appetite”, the list goes on.  Indeed, with bitcoin now officially a $1 trillion asset class Wall Street can ignore bitcoin no longer.

On-chain metrics suggest confidence in bitcoin achieving a six-figure price target is high.  The number of active bitcoin addresses is very near an all-time high, whilst at the same time the inflow of bitcoin onto exchanges is trending down, by around 50% since mid-Jan.  With more and more investors placing their bitcoin in cold storage, the number of bitcoin sellers is decreasing day by day.  This is highlighted by some large-scale transactions, with just one transaction of 12,638 bitcoin being transferred off the Coinbase exchange recently. That’s equivalent of three-quarters of a billion dollars being taken off-exchange and moved into cold storage, possibly in the Swiss Alps.

In terms of technical analysis, conclusions of short- and long-term price targets are far more exuberant.  According to Bloomberg the “technical outlook for Bitcoin in 2021 remains strongly upward”.  They note the similarity of price movements after halvings, which occurred in 2012 and 2016, and how price movements after the 2020 halving mirror those gone previous.  With that in mind Bloomberg suggests a price target of $400,000: “to reach price extremes akin to those years in 2021, the crypto would approach $400,000, based on the regression since the 2011 high”.  On Twitter, PlanB released an updated bitcoin stock-to-flow model that shows the bitcoin price closely tracking the model forecast up to $100,000 by year-end.  Given the historical accuracy of this model $100,000 seems within touching distance.

With bitcoin currently trading at a new all time high of $63,000 the headlines are certainly encouraging.  The IPO of Coinbase couldn’t have come at a better time for bitcoin bulls.  Suggestions of a $100 billion valuation coinciding with a bitcoin ATH?  Could it be any more bullish? Or is buying gold still the way forward?

Gold & Crypto updates from VAULTALP

Lee Fuller, WordPress Developer, UK