ZeroHedge |Tyler Durden – Friday, Dec 25, 2020 – 10:00
Crypto enthusiasts got another early Chistmas gift overnight as Bitcoin surged to new record highs…
Topping $24,600 for the first time ever…
The driver of this move appears to be more institutional interest as Cointelegraph reported, while not proven, single large outflow spikes suggest that a buyer has purchased a large amount of BTC and the proceeds are being moved to a single storage wallet.
“Another big Coinbase outflows a few hours ago,” Ki Young Ju, CEO of CryptoQuant, added in Twitter comments.
“Institutional investors are buying $BTC.”
In November, miners unlocked just under 28,000 BTC in block rewards – barely more than the sum total of the two Coinbase Pro transactions. This implied supply squeeze forms a central argument for continued upward price action.
Underlying desire to suck up the Bitcoin supply at $23,000 contrasts with external factors influencing market sentiment, notably revolving around Ripple’s U.S. lawsuit and shifting expectations over the Mt. Gox rehabilitation proceedings.
Concerns that Ripple’s associated altcoin XRP could become all but untradeable thanks to legal action appeared to spark considerable volatility in Bitcoin over the past 24 hours.
At the same time, the market is awaiting the distribution of funds to Mt. Gox’s creditors, who after a six-year hiatus may well be keen to sell some or all of their BTC at 2020 prices, resulting in $3.2 billion of additional selling pressure.
Beyond these short-term factors, however, it remains clear that institutions are bullish on Bitcoin as a whole, with fresh commitments surfacing almost constantly.
As Galaxy Digital CEO Mike Novogratz noted during an interview with CNBC this week…
“It tells you about how powerful this bull market is […] They are throwing lots at the system, and it’s not actually impacting it.”
Furthermore, Bitcoin price hitting $100,000 to $200,000 in the next 12 months is becoming a quite common, if not “conservative,” prediction.
As CoinTelegraph’s Allen Scott notes, while you’re undoubtedly “in it for the technology,” the most popular and hotly-debated topic, particularly as far as public interest is concerned, remains the price of Bitcoin (BTC) and speculating on its value in the future.
Currently, Bitcoin is in a bull market cycle, up over 200% year-to-date and outperforming everything else in 2020 with the exception of a few stocks like Tesla. But this rally seems different than the one in late 2017. For one, the all-time high has been definitively broken. Second, institutions are accumulating — while the public still sits largely on the sidelines.
“We are in a flood of money and credit”
Six-figure price predictions per Bitcoin are becoming increasingly common for this bull cycle with accelerating central bank monetary expansion as the key driver.
In fact, billionaire investors such as Ray Dalio are beginning to warm to the idea of Bitcoin alongside gold as a way to diversify against what he calls “the depreciating value of money.”
“We are in a flood of money and credit that is lifting most asset prices and distributing wealth in a way that the system that we’ve come to believe is normal is unable to, and that is threatening to the value of our money and credit,” he warned in a Dec. 8 Reddit session.
“Most likely that flood will not recede, so those assets will not decline when measured in the depreciating value of money. It is important to diversify well in terms of currencies and countries, as well as asset classes.”
Will Bitcoin hit $100K-$200K?
As Cointelegraph reported in May, Morgan Creek’s CEO Mark Yusko said BTC price could exceed $100,000 over the next year or so. The price has now more than doubled since, but it still has to gain roughly another 300% in the next 12 months to reach six figures.
This estimate echoes the forecast of the popular Stock-to-Flow (S2F) model, which its creator, planB, says continues to be right on track. Last month, planB reiterated that he now has no doubt BTC will hit $100,000 by December 2021 due to a “supply shortage.”
“People ask if I still believe in my model. To be clear: I have no doubt whatsoever that Bitcoin S2FX is correct and Bitcoin will tap $100,000-288,000 before December 2021,” he wrote last month.
As reported, Bitcoin has caught up to the S2F model mean trend line in the past month.
A “conservative” $200,000-$300,000?
The $200,000 price prediction is even becoming relatively tame, according to other analysts. Popular on-chain analyst Will Woo says he’s seeing more evidence of “hodling” this time around, as well as a dwindling BTC supply on exchanges as a result of the previously-mentioned shortage of stock.
BTC reserve on all exchanges. Source CryptoQuant
According to Woo, this will be a double-whammy for the bears.
“My Top Model suggesting $200K per BTC by end of 2021 looks conservative, $300K not out of the question.”
“I’ve never been so bullish for 2021,” he continues in another post. “This re-accumulation phase coincides with spot market inventory depletion roughly 2x longer and deeper than the last cycle. It will send BTC.”
$400,000 and higher for “digital gold”?
Even higher price predictions stem from the argument that Bitcoin can challenge — or is already starting to challenge — and eventually supplant gold as a de facto store of value. Interestingly, some of the most bullish forecasts have started to come from legacy finance as Bitcoin rose to new all-time highs in early December to vastly outperform gold in 2020.
In November, for example, an analyst from Citibank told clients in a note that Bitcoin could reach as high as $318,000 in 2021. Citibank managing director Tom Fitzpatrick cited Bitcoin’s historic “unthinkable rallies followed by painful corrections.”
Currently, the Citibank executive believes BTC is in the middle of a bull run that appears to be in “what looks like a very well defined channel,” which sets it up for a $318,000 target in December 2021.
JPMorgan meanwhile is also starting to point out Bitcoin’s increasing popularity among traditional investors. In fact, the investment bank giant sees a lot more upside potential from Bitcoin as “digital gold,” compared to the already “very advanced” adoption of gold.
In a note to clients, the strategists said:
“The adoption of bitcoin by institutional investors has only begun, while for gold, its adoption by institutional investors is very advanced. If this medium to longer-term thesis proves right, the price of gold would suffer from a structural headwind over the coming years.”
Today, Bitcoin’s market cap is less than 4% of gold’s. This immense upside potential has also prompted other big-name investors to share their predictions that involve Bitcoin challenging and even surpassing gold with its $9 trillion market cap.
Morgan Creek’s Anthony Pompliano still targets around $100,000 in 2021. However, in the summer he gave a $400,00 target in the longer term if BTC starts catching up to gold. Meanwhile, Gemini exchange founders Tyler and Cameron Winklevoss believe Bitcoin “being a better gold than gold,” which means that price rising to $500,000 is now inevitable.
MicroStrategy and other investment firms buying significant amounts of Bitcoin is only the beginning of a major shift, according to Cameron. What’s more, Wall Street has started warming to Bitcoin as its quickly becoming a “no-brainer” for investment portfolios. Comparing it to the bottom of the first in a nine-inning baseball game, the Winklevoss twins expect Bitcoin’s value to continue climbing in the coming years.
“What if every Fortune 100 or 500 company does that, what if central banks start doing that? It hasn’t even started,” he added.