Bitcoin is stringing records together: Will the end of the corona pandemic stop the rally?

2 months ago

Bitcoin is stringing records together: Will the end of the corona pandemic stop the rally?

Source: Business AM 18 February 2021 by Niels Saelens

Bitcoin is currently worth $52,000, or nearly 80 percent more than at the beginning of this year. Nothing seems to stand in the way of Bitcoin. Still, some analysts see some dark clouds on the horizon.

After hitting the $50,000 mark, Bitcoin continues its record rate. At the time of writing, the coin is worth about $52,100. Some investors are convinced that this is just the beginning of a real rally.

1 million dollars

Anthony Pompliano, co-founder of Morgan Creek Digital Assets, a leveraged fund with a focus on blockchain, doesn't rule out the possibility that the cryptocurrency could be worth $1 million by the end of this decade. In an earlier interview with BusinessAM, LiteBit CEO Olivier Van Duijn also expressed his belief that Bitcoin could be worth $1 million in the future.

According to Pompliano, the central banks are partly responsible for the striking rise in Bitcoin. "They have injected billions into the economy in recent years. Due to the low interest rates, both companies and individuals are looking for ways to make that extra money pay off. As a result, they eventually targeted Bitcoin", he explains in an interview with the American news site CNBC.

"As more people enter the crypto market, there is more liquidity. This increases the use value of Bitcoin, which promotes the stability of the currency", Pompliano continues. "Bitcoin is well on its way to becoming the global reserve currency of the internet generation."

Virtual gold

Still, not everyone seems to share his optimism. In January, JP Morgan put forward $146,000 as a long-term target for crypto. To calculate that goal, the American bank has made the comparison with gold.

"Bitcoin is like digital gold," said Nikolaos Panigirtzoglou, global markets expert at JP Morgan. "The value of gold held by the private sector, for investment purposes only, is approximately $2.7 trillion. To reach that market value with Bitcoin, the digital currency must be worth $146,000”, he argues.

But there are caveats, the biggest of which is Bitcoin’s price volatility. The digital currency is known for its wild price swings. According to the expert, Bitcoin is five times more volatile than gold.

Impact of the end of the corona pandemic

Panigirtzoglou expects price gains to lose speed in the coming months. He is convinced that the end of the corona pandemic will halt Bitcoin's rally. "As soon as the health crisis is over, people will be outside more often again, for example to go to work. As a result, crypto trade will slow down", he argues.

Shortly after the GameSpot boom, similar arguments could be heard from analysts. According to them, many people now invest because they simply have nothing to do. Bitcoin and GameStop have also been in the news in recent months. Many new investors have therefore seized the opportunity to make their savings a little more profitable.

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