The path of least resistance for bitcoin is on the higher side, and the cryptocurrency could more than double its current value in 2021, according to Bloomberg analysts.
“Bitcoin will maintain its tendency to move in price to 2021, in our view, with macroeconomic, technical and demand [versus] supply indicators that support a $ 50,000 target resistance, suggesting about a $ 1 trillion market cap, ”Bloomberg Crypto noted in a monthly report.
The demand-supply mechanics are currently trending bullish, as only 900 new coins are mined daily compared to 1,800 in 2017, and institutional participation is increasing.
Notably, assets under management at Grayscale Bitcoin Trust recently broke the $ 10 billion level, having started the year at $ 2 billion. The trust has bought nearly 70% of new bitcoins mined since May 11, when the cryptocurrency got its third prize prize. Grayscale is owned by Digital Grarency Group, which is also the parent company of CoinDesk.
Open interest in bitcoin futures listed on the Chicago Mercantile Exchange has risen above $ 1 billion for the first time ever compared to closer to $ 120 million in 2019, according to a Skew data source.
Bloomberg analysts said they expect these trends to continue in 2021 because central banks and large governments are unlikely to scale back or suspend their inflation-stimulating programs anytime soon. Unconventional policies adopted by authorities to counteract the slowdown caused by coronavirus have boosted demand for bitcoin and gold this year.
Past data also favors a rally to $ 50,000, according to Bloomberg. “The 2017 advance followed a supply drop in 2016 to 1,800 coins a day, and a similar one occurred in 2012-13,” Bloomberg analysts noted.
History seems to repeat itself. Bitcoin’s recent move to an all-time high of $ 19,920 has taken place roughly seven months following the May 11 prize halving. Similar price action had developed following a July 2016 supply decline.
While the odds seem to be stacked in favor of the bulls, the cryptocurrency remains vulnerable to a March-like panic value in the global equity markets, according to Bloomberg analysts. However, they do not see prices drop below $ 10,000.
“The $ 10,000 mark has moved to a critical support level after serving as the crypto resistance mark since 2017,” the report states.
Bitcoin fell sharply to $ 3,867 in March as global stock markets collapsed on fears of a coronavirus-led recession, increasing demand for cash. Prices quickly recovered to $ 10,000 before halving the May 11 prize.
The highest cryptocurrency by market value reached an all-time high of $ 19,920 earlier this week, surpassing the all-time high of $ 19,783 reached in December 2017. Prices have more than doubled during the three last month only.