Bitcoin smashes through R1 million where to next? – Moneyweb

As bitcoin crashed through the R1 million this week, analysts are casting their eyes to the next target, with some seeing R2 million by the end of 2021.

The prospect of a R1 million bitcoin seemed fanciful just a few years ago, just as the shrieks of bubble rang out when it cracked R300000 in 2017. In retrospect, it was a bubble. The price dropped 84% before commencing its climb to where it is today.

Join heated discussions with the Moneyweb community, and get full access to our market indicators and data tools while supporting quality journalism.

R63/month or R630/year

SUBSCRIBE NOW

You can cancel at any time.

Bitcoin price in rands

Farzam Ehsani, CEO of crypto exchange VALR, says bitcoin breaking R1 million shouldnt be surprising to those who have taken the time to educate themselves about this asset.

In my view, while I expect volatility to persist, were looking at a very undervalued asset in Bitcoin and an undervalued asset class in cryptocurrency overall, says Ehsani.

I expect that in the next few years well see Bitcoin ten times from here, but there will be tremendous peaks and troughs along this path as we have seen in the past.

While Bitcoin is breaking all-time highs consistently, its not the only asset class to do so. Stock markets around the world have also been breaking all-time highs.

So while one may be tempted to speak about Bitcoin strength I think were witnessing the weakening of fiat government currencies such as the rand and the dollar against a wide range of real assets and services.

Says Jon Ovadia, CEO of crypto company Ovex: I think were going to $150 000 by the end of the year. I had complete conviction we were going past $100 000 this year until Elon Musk started tweeting (implying that Tesla might sell some of its bitcoin, though he later pulled back from this). If Elon had gone full bear, it would have been hard to see $100 000.

Dean Joffe, co-founder of crypto investment platform BitFund, believes bitcoins bull run is likely just starting as all short-term indicators have shown 100% buy pressure. This is uncommon, as ordinarily, when an asset hits a new all-time high, the market signals sell pressure as investors try claim gains from their holdings. The short term is looking extremely bullish for bitcoin, as it continues to trade above the 100- and 200-day moving average.

According to the Crypto Fear & Greed Index, the market is in an extreme greed territory, meaning that as investors rush into the market to buy more bitcoin, the price should continue being pushed up (although resistance levels may be expected at certain price ranges).

It is important to note that when investors get too greedy, the market is ordinarily due for correction, says Joffe.

With a market capitalisation of more than $1.25 trillion (R20 trillion) and with global institutions pouring into this new asset class, we may continue to see a sharp rise in bitcoins price. According to research by Glassnode, as supply continues to be an issue, and as demand increases, the price will continue to increase.

Joffe adds that the downside to this bull market may be regulatory uncertainty, as seen in South Africa, and interference by governments, which stifles innovation. However, based on past history, the breakout of bitcoin may signal the start of a final push this year, before a consolidation early next year. Naturally however, due to various economic and regulatory circumstances, this cycle may not follow past history, says Joffe.

According to an analysis by crypto exchange Kraken, if the bitcoin price copies its 2017 performance, this cycles top could end up being approximately $96 355 for bitcoin. The pseudonymous crypto analyst, PlanB has predicted that bitcoin will reach $98 000 (approximately R1.5 million) by the end of November and conclude the year at $135 000 (approximately R2 million).

However, the market may turn at any time due to regulatory interferences or other similar events. Therefore, it remains a fundamental principle to have a well-diversified cryptocurrency portfolio, and a reasonable and sound allocation to cryptocurrencies, says Joffe.

One of the factors driving bitcoin is investors adoption. In the last month alone, more than 360 000 new people have become bitcoin holders. According to CoinMarketCap data, the number of bitcoin addresses increased to just under 39 million. There is a proven link between the increase in bitcoin addresses and the bitcoin price. Apples CEO Tim Cook recently confirmed that he holds bitcoin, and if Apple was to announce a holding like Tesla or MicroStrategy, a sudden surge in price could follow.

Says Joffe: Arguably, the traditional financial markets have been reeling from the inflation fear over the past 18 months due to Covid-19. As a hedge against inflation, new investors have bought cryptocurrencies such as bitcoin, causing a surge in price. As investors continue to wait for inflation data, bitcoin has emerged as the primary inflation hedge for mainstream investors, specifically at a time [when] gold and other inflation hedges were on a downturn.

Read more here:
Bitcoin smashes through R1 million where to next? - Moneyweb