At the end of 2020, Bitcoin made one of the most impressive moves in its entire history – going from $19k at the start of December to a January 8 high of $41.9k.
Following the major breakout to $41k, Bitcoin (BTC) pulled back to $30k before starting its upward trajectory towards April’s former all-time high (ATH) of $64k.
From there, the pain started with a three-month retrace back to the $30k level before slowly grinding back up to a November ATH of $69k. However, the pain has since returned with another retrace back to current levels of $46k.
Following a rollercoaster year for Bitcoin, which started with swathes of investments from an array of institutional investors and businesses, Coin Rivet now looks at what’s next for the market-leading asset.
A new ATH?
Seemingly the question on everybody’s lips, a new all-time high for Bitcoin would mark the asset’s eventual move towards the $100k price point and once again secure its status as a $1tn asset.
However, the question is when? Well, nobody knows.
Despite heavy investment from major global businesses, country-wide adoption from El Salvador and others alongside mainstream adoption in the form of payments and ETFs, Bitcoin has still yet to show any major strength outside of bullish catalysts.
Now, it’s anticipated that an institutionally-led rally or another major, industry-changing development is required to spur a push towards the previous ATH of $69k and beyond.
Institutional interest
A large contributor to the growth of Bitcoin has been institutional interest in Bitcoin and cryptocurrencies.
Demand for the asset has been high in 2021 according to Grayscale, which set the Bitcoin community alight when it announced it will eventually convert its Bitcoin fund into an ETF product.
This sparked a number of other ETF products to be applied for, including applications from Van Eck and Fidelity International.
This, in turn, led to a number of large institutions and businesses investing in Bitcoin, including Tesla and MicroStrategy alongside support from leading banks such as JPMorgan and Morgan Stanley.
Due to its status as a ‘store-of-value’ (SoV) asset and a ‘hedge’ against rising inflation caused by the devaluation of the US dollar, holding Bitcoin on a balance sheet has become a popular way to gain exposure to cryptocurrencies.
A similar swathe of investment in Bitcoin from an array of new institutions and global players could spur price action upwards. Conversely, little to no further interest in the asset could signal that Bitcoin is losing favour as the go-to SoV over gold.
The need for Bitcoin
Alongside the growing interest in the asset, many bold predictions have been made about Bitcoin and its ability to terraform an unstable and declining economy. Having been designed as a form of ungovernable, decentralised money, the need for Bitcoin has become more clear than ever.
Already an established part of global financial markets despite being only a $1tn asset, the draw of Bitcoin may prove too much to ignore for everyone – especially those interested in diversifying their portfolios into digital assets.
If it can maintain its status as the leading SoV, continue to become globally adopted, and prove itself as a truly decentralised asset, then Bitcoin could reach and exceed the predictions set by many.
However, regulatory woes alongside potential cryptocurrency ‘bans’ could mar its progress into becoming more widely accepted.
Disclaimer: The views and opinions expressed by the author should not be considered as financial advice. We do not give advice on financial products.