(Kitco News) Bitcoin is quietly making its way back to its record highs of nearly $20,000, rising $4,000 in November alone.
On Tuesday, bitcoin continued its massive rally, breaching $17,000 for the first time in almost three years. At the time of writing, the cryptocurrency was trading at $17,506, up 4.71% on the day.
The next significant resistance level for bitcoin will be its record high of nearly $20,000, last seen at the end of 2017, said Bloomberg Intelligence senior commodity strategist Mike McGlone.
“$20,000 bitcoin is primary hurdle toward $1 trillion market cap,” McGlone wrote on Monday, adding that the cryptocurrency is likely to continue its climb higher next year. “Bitcoin, the digital version of gold but with more-limited supply and a history of adding zeros, appears to be in an early price-discovery stage and may simply continue its ascent in 2021,” he said.
Pushing bitcoin higher is mainstream adoption, McGlone added, noting that the market could see $40,000 bitcoin as soon as next year.
“History suggests it should be a matter of time for bitcoin to reach a $1 trillion market cap vs. about $300 billion on Nov. 13. Increasing demand, adoption and interest vs. diminishing supply suggest the crypto will stay the course. Our graphic depicts its market-cap regression line since $10 billion in 2013 is on pace for $1 trillion in about 2022, implying a price around $55,000 vs. the current level around $16,000. If the future rhymes with the post-halving years of 2013 and 2017, and we factor maturity of about a quarter of the 2017 advance, Bitcoin may reach $40,000 in 2021,” McGlone wrote.
Citibank’s forecasts on bitcoin are even more aggressive lately, with a recent report not ruling out a move above $300,000 by December 2021.
Citi managing director Thomas Fitzpatrick said: “The whole existence of bitcoin has been characterized by unthinkable rallies followed by painful corrections (the type of pattern that sustains a long term trend).”
Fitzpatrick compared bitcoin to the 1970s gold market. “That period with regard to the gold price was a structural change in the modern-day monetary regime as it broke the orthodox relationship between fiat currencies and gold, ushering in a world of fiscal indiscipline, deficits and inflation,” Fitzpatrick wrote.
Citi’s note to clients was first leaked by Twitter user ‘ClassicMacro’.
As bitcoin breached $17,000, Ray Dalio, the billionaire founder and co-chairman of the largest hedge fund in the world Bridgewater Associates, tweeted that he “might be missing something about bitcoin,” noting that he does not view bitcoin as an effective currency.
“It’s not very good as a store-hold of wealth because its volatility is great and has little correlation with the prices of what I need to buy,” Dalio said.
I might be missing something about Bitcoin so I’d love to be corrected. My problems with Bitcoin being an effective currency are simple… (1/5)
— Ray Dalio (@RayDalio) November 17, 2020