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After dropping $3000, Bitcoin nearing its all time high, but why?

The sudden Bitcoin sell-off wiped around $50 billion from the value of the world's combined cryptocurrencies and left crypto traders on edge. But now it's rocketing again

On November 26, BTC plunged by close to $3,000 in less than 24 hours The price correction may be a function of a number of crypto traders moving larger volumes of Bitcoin to exchanges Bitcoin could surge to $100,000 by the end of 2021

The sudden sell-off wiped around $50 billion from the value of the world’s combined cryptocurrencies and left bitcoin (BTC) and crypto traders on edge. 

But many are using bitcoin’s price performance over recent years as evidence the rally will resume..

And it has. it’s nearing the $20k ceiling it hit in December 2017, today trading at $19,500 at publishing time.

“I believe that this bull run will continue, with bitcoin peaking at $30,000 by the end of 2020 and more gains to be expected next year,” Philippe Bekhazi, chief executive of payment and FX exchange platform Stablehouse.

Chyna Qu, chief operating officer at decentralized loan network DeFiner said: “We predict that bitcoin will peak at the end of this year at around $40,000,”, pointing to mining reward cuts (May’s halving event) and the rise of decentralized finance (Defi).

Let’ try to make sense of all these predictions which AMEinfo is merely reporting on.

Read: Eyeing $20k for Bitcoin? Try $300k for what Citibank calls “21st Century Gold”

$3k Bitcoin wipeout and expectations

On November 26, BTC plunged by close to $3,000 in less than 24 hours after hitting highs not seen since the end of 2017 at $19,497.

Many predicted the cryptocurrency would soon hit an all-time high of $20,000.

Antoni Trenchev, a managing partner and co-founder of Nexo,  one of the world’s biggest crypto lenders, said he expects bitcoin to rally well into the $20,000s and beyond but warned that 20-30% price pullbacks are to be expected.  

Bitcoin peaked at $19,783 in December 2017. After hitting that milestone, the bubble burst, and bitcoin plummeted to $3,122 the following year.

It climbed past $15,000 on Nov. 5, $18,000 on Nov. 19, and $19,000 on Nov. 24.

Bitcoin’s market value recently reached $356 billion, according to CoinDesk.

After the $3k crash, BTC reached $16,300 levels.  

What’s the BTC hype about?

The price correction may be a function of a number of crypto traders moving larger volumes of Bitcoin to exchanges, where they can be more easily sold at a better price when the token approaches the $20,000 mark.

Also, many investors feel the stock market is utterly divorced from economic reality right now with low return expectations from traditional markets and high risks of an uncertain future associated with a devalued US Dollar, making digital assets more attractive.

Other developments in recent months have helped fuel this year’s rally. Fidelity Investments launched a Bitcoin fund, while public companies Square Inc. and MicroStrategy Inc. recently invested in the coin. And one of the most notable events for fans was PayPal Holding Inc.’s October decision to allow customers to access cryptocurrencies.

Guy Hirsch, US managing director for multi-asset brokerage eToro, has been tracking the total number of Tweets that mention BTC on a daily basis. At the height of the 2017 crypto boom, he was seeing around 120,000 Bitcoin-related tweets a day. Today that number ranges between 30,000 and 60,000, according to data from eToro and The Tie.

“This rally is clearly different in a number of ways,” Hirsch said. “It is less speculative, and we’re very bullish on what’s happening.”

Greg King, chief executive officer of Osprey Funds, a subsidiary of REX Shares that runs a Bitcoin trust, says every investor has progressed three years further down the adoption curve (from 2017).”

Read: Cryptos are Gen Z’s, millennials’ favorites but is the US presidency spurring a Bitcoin boom?

BTC at $100k?    

Bitcoin could surge to $100,000 by the end of 2021, according to the crypto investor Anthony Pompliano, co-founder of Morgan Creek Digital. He said that the macroeconomic environment right now was “rocket fuel” for Bitcoin with low-interest rates, money printing, and the Federal Reserve’s average inflation target of 2% have driven retail and institutional investors into Bitcoin which could suddenly become a consensus trade.

The Libra effect or is it Diem?

The long-awaited Facebook-led digital currency Libra is preparing to launch as early as January. 

A recent announcement said that Libra cryptocurrency is getting a new name, Diem, in an effort to show that the project has “organizational independence” from Facebook.

The 27-strong former “Libra Association” will be initially launching a single coin backed one-for-one by the dollar.  

When first launched in June 2019, Libra received a skeptical reception from global regulators, who have warned that it could threaten monetary stability and become a hotbed for money laundering.  

Some of Libra’s original founding members, including PayPal, Mastercard, Vodafone and eBay, quit in late 2019 and early 2020 and distanced themselves from the project.

The association then announced in April this year that it was overhauling its vision to address regulators’ worries, limiting its scope and promising extra measures to police its system for abuse.  

The appointment of HSBC legal chief and former George W Bush-era terrorism finance tsar Stuart Levey in May 2020, as its first chief executive, marked a turning point for the project, as it sought to cast itself as independent from Facebook. 

Novi, the Facebook subsidiary rebranded from Calibra, has been creating a digital wallet to allow Facebook users to hold the Libra currency.  

The news comes as Bitcoin, the original cryptocurrency, rallied to record highs of close to $20,000, and amid rising interest in digital currencies from professional investors and central banks, and as the coronavirus pandemic has quickened a shift from cash towards digital payments.