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The Bitcoin Mania is back and with it, the return of skyrocketing forecasts from celebrity crypto fund managers to Wall Street backers as to where it can go next.
The world’s largest digital currency is in the midst of an exuberant rally that this week saw above $ 18,800 for the first time in nearly three years.
Both strategists and cryptocurrency fans are rushing to project its next never-before-seen heights. Outside of Twitter experts’ eternal “moon” statements, forecasts range from $ 25,000 to more than $ 300,000 by the end of next year.
Here’s what helped the Bitcoin run: A warmer hug from Fidelity Investments and JPMorgan Chase & Co. is often cited as a catalyst, as is PayPal Holdings’ decision to allow its customers access to cryptocurrencies.
Then there is always FOMO, or fear of getting lost, as prices rise. For crypto evangelists, these developments are only the first crossroads on the road to ubiquity.
“Suddenly you have this near-perfect background that not only lends validity to the asset class, but is also demonstrating its resilience,” said Michael Sonnenshein, chief executive officer of Grayscale Investments, which manages the largest exchange-traded crypto trust. It’s “showing investors once again, no matter how many times he’s challenged, that he has a way to come out almost stronger or demonstrate his ability to be really, really resilient.”
During Bitcoin’s euphoric rush this week, Fundstrat Global Advisors strategist David Grider raised his end-of-2021 price target to $ 25,000 from $ 16,500, or about another 40% above the closing price of Friday.
Grider relies on an internal model that looks at valuations and takes into account the prices of cryptocurrencies. In 2017, when Bitcoin rose to nearly $ 20,000 – its record high – its picture showed the coin was in an “unbelievable bubble”. He says he answered well and is sure his model will work again this time.
“History doesn’t repeat itself, it rhymes,” said Grider, the company’s head of digital asset strategy. “The audience is bigger, the market is bigger, it’s a bit more institutionalized – you have several fields of capital coming in.”
To be sure, Grider’s predictions sound familiar to cryptocurrency veterans. Fundstrat co-founder Tom Lee had started 2018 with a year-end price target of $ 25,000, before ditching the timeline for his forecast in December, when it was between $ 3,000 and $ 4,000.
However, cryptocurrency fans cite many reasons why it can continue its run this time around. Famous billionaire investor Mike Novogratz says he sees “tons of new buyers” amid “little supply”.
Novogratz, who is the founder of Galaxy Digital, hasn’t been shy about his views on Bitcoin and this week said he saw it reach $ 65,000. His comments came via Twitter in response to a question posed by “Game of Thrones” star Maisie Williams, who asked her 2.7 million followers if she should invest in the coin. (She did it.)
Bitcoin would need more than triple to reach Novogratz’s goal. In November 2017, the former hedge fund manager predicted the coin would hit $ 40,000 by the end of the following year, only to see it drop below $ 4,000.
The most bullish mainstream projections are those that see Bitcoin reaching $ 100,000 or more. Tom Fitzpatrick, a Citigroup strategist, made a splash this month when he said the cryptocurrency could potentially reach $ 318,000.
Rising forecasts have warned observers that the volatility that has been a hallmark of Bitcoin since its debut more than a decade ago is likely to return.
Edward Moya, senior market analyst at Oanda, recalls attending a cryptocurrency conference in 2014. At the time, Bitcoin’s price was hovering around $ 600 after skipping the previous two months. And everyone, he says, was speculating about how high he could get. The event, and others like it, reminded him of the early days of the Wild West of the foreign exchange markets.
“Cryptocurrencies have come a long way,” he said.
But Moya is skeptical that this race will continue: it indicates the last time cryptocurrency fans overvalued a Bitcoin rally. “Today’s extravagant calls seem primarily based on momentum mania,” he said. “I doubt that institutional traders will only allow Bitcoin to go in one direction.”
