The rally in Bitcoin and other crypto doesn’t seem to have run out despite the 600% surge in price. And with emerging startups such as
CoinSwitch Kuber
trying to make Bitcoin investing effortless, millions of retail investors have joined the Bitcoin Bandwagon.
Putting short term volatility aside and looking at the long run, analysts state that it could touch $100,000 (Rs 72 lakhs) next year.
The rise of Bitcoin
In 2009, the first-ever digital currency, Bitcoin, was introduced as an alternative to the current financial system’s loopholes. During the time, Bitcoin was valued at $0, and just a few crypto nerds would mine them as a collectible. After 2010 – The Bitcoin Pizza Transaction happened, people looked at it as a currency that could be used to purchase goods and services.
By 2013, Bitcoin gained more popularity and touched $1,000. After the second Bitcoin Halving event took place, the coin rose significantly in value to $19,000. However, there was a minor blip, and after 2018, its value dropped and its price settled at about $5,000 at the start of 2020.
Since then, it has been a year-long rally amid two significant events.
- The global pandemic: most people sought bitcoin as a hedge against the shaky economic crisis caused by the spread of Covid-19. Even institutional investors such as Microstrategy, Tesla, Square Corp etc., resorted their cash reserves into Bitcoin, stating that it was a good store of value against inflation.
- Third Bitcoin Halving event: Halving happens once in four years, where the rewards of Bitcoin Mining are cut down by half. After the third halving, the mining prize, 12.5 BTC, was reduced to 6.25 BTC in May 2020. It reduced the coins in circulation significantly, thus triggering a higher demand.
After a steady rally was set off in Oct 2020, the value of Bitcoin has touched new heights – crossed $20,000 in Dec 2020, $40,000 in Jan 2021, hit $50,000 in Feb 2021 and is now trading around $54,500 globally.
Could Bitcoin really hit $100,000?
The digital currency that was once viewed as mysterious by many in the past has now exploded in both value and popularity. It has mainly become mainstream – Giant financial institutions like Paypal, Visa, JP Morgan etc., are offering crypto services, and more retail investors are interested in purchasing Bitcoin now more than ever.
Despite its volatility, bitcoin has surged in value, especially in the past year. We could attribute this Bitcoin rally to two things:
- Better trust
- Global trends
Early on, major concerns revolving around Bitcoin were, ‘Will it get hacked?’, ‘Is decentralization a truly workable solution’, ‘will halving break the system?’ etc. Now a decade down the road, many of these issues have been answered. Bitcoin works on reliable technology, and it does not break.
At the same time, the world is now witnessing Bitcoin being associated with more institutional investors like Tesla, Microstrategy etc. Most institutions are now considering converting their cash reserves into Bitcoin as a hedge against financial crises.
Of course, many other cryptos have joined the race, which diverts some retail investors’ interest away from it. Nevertheless, it remains the most significant cryptocurrency with a total market capitalization of $1.15 trillion, higher than the combined market cap of the world’s three largest banks (J.P Morgan, Bank of America, and The Industrial and Commercial Bank of China).
Bitcoin is now closer to $100K than it is closer to $0. The recent developments around Bitcoin worldwide are a testament to the fact that it is inching closer to becoming a mainstream asset class.
ET Spotlight SpecialAnalysts believe that if the trend continues, Bitcoin might hit $100k by the end of 2021. The predictions are based on the stock-flow-model – 94% correlation to Bitcoin price. This model is used to measure the scarcity of commodities such as gold.
Is it too late to invest in Bitcoin?
Bitcoin has been breaking into all-time highs every month since Oct 2020. It surpassed the mark of $50,000 (₹37 lakhs) recently, and it seems to be heading near $60,000 (₹43.5 lakhs) soon.
Although it would have been ideal for an investor to have entered the investment space earlier in 2020, it does not mean that it is now too late to invest in Bitcoin, provided that you invest what you can afford.
There may be dips in its value from time to time, but even a small investment you make in Bitcoin today could return manifold in the long run.
What is the minimum investment required to buy Bitcoin?
Although one Bitcoin price may seem overwhelming, retail investors can choose to buy fractional amounts of Bitcoin. Some Indian platforms, such as
CoinSwitch Kuber
, allow its users to invest in Bitcoins with a minimum of just Rs 100.
Considering the above data and trends around the crypto market, we could say that there is a lot of margin-left for Bitcoin. Its value could only increase in the future.
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