There is a growing belief that bitcoin will surpass $100,000 by the end the year, according to Mike McGlone, Bloomberg Senior Commodity Strategist. McGlone pointed out the increasing mass adoption and declining active supply as reasons for his prediction that BTC would more than double in value within the next three months.
Bloomberg: BTC up to $100K
BTC’s price has been an incredible rollercoaster ride this year. It soared from below $30,000 up to $60,000 in just a few months, before falling back to its 2021 entry level.
It has gained approximately $20,000 since July’s dark days and is currently at just under $50,000. Even though there are only four months before the end of this year, predictions continue to be made for a greater than 100% dollar increase in that timeframe.
Mike McGlone, Bloomberg’s chief economist, has also joined the bandwagon and outlined a few reasons. Before addressing the declining supply of primary cryptocurrency, he briefly touched on historical BTC trading trends.
Bitcoin Price Chart. Source: Bloomberg
You can view this from many different perspectives. After an event known as the halving, the speed at which new bitcoins are created decreases every four years. The current rate of creation is 6.25 BTC per block, after the third one in 2020.
The three million coins that are considered lost and inaccessible can be added to the total. Long-term bitcoin holders are determined to keep their bitcoins, even if the price falls as it did earlier in the month.
This is also in line with the stock-toflow model. The S2F envisions a $100,000 price per coin by the year’s end, by defining the stock as the amount of existing reserves (or stockpiles), and the flow as BTC supply on the market annually.
Adoption has a role too
McGlone’s third reasoning, increasing adoption, works in conjunction with decreasing supply. The basic economic principle states that if an asset’s supply decreases while demand increases or stays the same, then the price should also rise.
The primary cryptocurrency is in high demand. It is owned by giant corporations that have invested billions of dollars, and some of these companies pledge not to sell any.
Large banks are being pressured by institutional investors to offer them regulated venues that allow them to receive BTC exposure. Grayscale’s Bitcoin Trust AUM has risen 10-fold since the end of 2019.
It’s no surprise, therefore, that so many people, from Jordan Belfort to Adam Back, Tom Lee, and Chainalysis CEO, believe bitcoin could reach six-digit prices by 2021.
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