Complex Made Simple

Bitcoin: The next price range is $0 to $∞ (infinity)

So what if Bitcoin can lose or gain $3000 in value overnight or $12,000 in a week. Will it become the next currency?

There are a host of risks and obstacles that stand in the way of Bitcoin progress Bitcoin has had an exceptionally trying end of February week Bitcoin may reach as high as $1 million in the next ten years

What volatility? 

So what if Bitcoin can lose or gain $3000 in value overnight or $12,000 in a week.

Citi thinks Bitcoin is at a “tipping point” and could one day “become the currency of choice for international trade” as companies like Tesla and PayPal warm to it and central banks explore issuing their own digital currencies.

“There are a host of risks and obstacles that stand in the way of Bitcoin progress,” the U.S. bank’s global perspectives and solutions team wrote in a note recently.

“Bitcoin’s future is thus still uncertain, but developments in the near term are likely to prove decisive as the currency balances at the tipping point of mainstream acceptance or a speculative implosion.”

Read: Tesla in Bitcoin’s driver’s seat, sending the crypto’s prices to the roof, literally

Read: If S&P 500 companies invest 1% of their cash in Bitcoin, look for BTC at $400,000

Bigger belief in BTC 

It marks a change in tone for major financial institutions on Bitcoin. Many banks have historically shunned the digital asset, arguing it has no intrinsic value and the hype surrounding it is akin to the tulip mania of the 17th century.

But Bitcoin’s wild ascent over the last few months has forced big Wall Street players to reevaluate the cryptocurrency. 

BNY Mellon, the oldest bank in the U.S., last month said it would offer custody services for Bitcoin and other digital currencies. Meanwhile, JPMorgan has said it’s looking seriously at Bitcoin.

Bitcoin and other cryptocurrencies are often subject to wild bouts of volatility. Just over a week after hitting an all-time high of more than $58,000, Bitcoin’s price shed more than $12,000. It’s still up more than 60% on the year and 460% in the last 12 months.

Crypto investors say Bitcoin’s latest bull run is unlike previous cycles — including in 2017 when it rose to nearly $20,000 before plummeting 80% the following year — as it has been driven by increased participation from institutional investors.

There are several hurdles that Bitcoin would have to overcome before seeing mainstream adoption, according to Citi.

“For institutional investors, these include concerns over capital efficiency, insurance and custody, security, and ESG considerations from Bitcoin mining,” the bank said. “Security issues with cryptocurrency do occur, but when compared to traditional payments, it performs better.”

Recent performance and institutional support

Bitcoin has had an exceptionally trying end of February week, and it doesn’t bode well for March, a month that’s traditionally bearish for the world’s biggest cryptocurrency.

 Elon Musk might not have helped matters… in the run-up to the correction, he had tweeted that BTC and ETH seemed high.

Previous tweets though had helped Bitcoin smash record highs, and the U.S. Securities and Exchange Commission could investigate Musk’s alleged impact on BTC and DOGE through his many, many tweets.

But BTC plunged yet again on Feb 27 below $45,000. At publishing, the top crypto hovered around $50,000.

Generally, analysts are looking for $50,000 to become established support before expecting any bullish continuation.

A flurry of good news throughout the week may have prevented things from going bad to worse for Bitcoin.  

MicroStrategy purchased an additional 19,452 coins, with CEO Michael Saylor declaring that his company has no intention of slowing down. It came after Square announced it had purchased 3,318 BTC for $170 million, following on from a $50-million spending spree in October 2020.

JPMorgan helped to cheer up the markets by telling clients that allocating 1% of a portfolio to Bitcoin would serve as a hedge against fluctuations in stocks, bonds, and commodities.

Ethereum is taking a beating.

Going to infinity

Jesse Powell, CEO of crypto exchange Kraken, predicts Bitcoin may reach as high as $1 million in the next ten years, according to a recent interview with Bloomberg.

“People see it surpassing gold as a store of value. So, you know, I think a million dollars as a price target within the ten years is very reasonable,” Powell said, adding that the younger demographics saw it as a “better version of gold.”

Bitcoin has, for a long time, been popularly compared with gold.  But while the yellow metal has a $11 trillion market cap, Bitcoin is at less than a tenth of that at its current $913 million market cap, a gap that proponents say might eventually be filled.

However, gold’s not the only endgame for Powell. He said that Bitcoin believers see the asset replacing all of the world’s fiat currencies and its value would eventually reach “infinity” after inflation weakened fiat money and more people turned to Bitcoin as a reliable investment. This is what’s commonly called hyperbitcoinization.

And if that were to happen, Powell says Bitcoin will not be measured against the dollar anymore. “You’d measure it against whatever you’d be buying with it, such as planets or solar systems,” he said.

Despite the seemingly outrageous price target, Powell’s not the only one to predict a million dollars or more per Bitcoin. It’s a sentiment that even Hal Finney, one of the asset’s earliest known users and developers, shared back in 2011.

Finney stated that Bitcoin would reach over $10 million per coin but many critics argue that Bitcoin is in a speculative bubble and that its real value is zero. So, if you take all views into account, in the future Bitcoin will be worth somewhere between zero and infinity.