What Will Happen to Bitcoin in 2021?
Just days into the new year, Bitcoin is up to the $42k mark. Is 2021 the year Bitcoin becomes a trillion-dollar asset? Will it be worth more than Silver? What will be the catalysts that take it to the next level? We did a 2020 Year in Review. How about a 2021 look ahead?
It’s the trillion-dollar question. What will happen to Bitcoin in 2021? We can speculate about whether or not it will become a $1 trillion asset this year, but thanks to a three-week run-up that started before the Christmas holiday, Bitcoin’s market cap is already above $840 billion Canadian at the time of this writing.
With an upcoming pullback likely at some point this year, it’s only a matter of time before investors see the next bull run pushing Bitcoin above that $1 trillion mark. Assuming that happens, let’s instead dive into some other predictions as to what might happen to Bitcoin and the broader cryptocurrency market in 2021.
Count on Institutional Investment in Bitcoin Accelerating Exponentially
If 2020 was the year of institutional investment in Bitcoin, 2021 will trump that by a mile. There are several reasons for this. Not the least of which is the overprinting of money by governments all around the world as they look to keep their citizens at home and away from the coronavirus.
All you have to do to see the effects of that is take a look at this long article filled with charts from Maclean’s magazine. It’ll show you charts that display federal financing programs in Canada skyrocketing, an unusual rise in Canadians being able to save money (because so much of it is being handed out), and accelerating the gap between rich and poor, among other fun facts.
These are all symptoms of an economy that Bitcoin is designed to override. You can rest assured that with just as much money being printed south of the border, the exact same thing is happening not only in the United States, but in almost every country around the world as well. But the overprinting of money is far from the only reason that institutional investing in Bitcoin is about to accelerate exponentially.
Publicly Traded Companies Are Obligated to Go Where the Money Is
Publicly traded companies don’t necessarily have to be cryptocurrency specific in order to enjoy the financial gains holding Bitcoin offers. Consider for a moment that Michael Saylor, the CEO of MicroStrategy Inc., has become one of the most vocal and influential proponents of Bitcoin and that his company holds no fewer than 70,000+ BTC in its coffers at the time of this writing.
The news bit here though is not so much that the company has come around to holding Bitcoin, it’s that the company itself focuses on providing analytics and mobility software to enterprise-level companies. While MicroStrategy is in the technology industry, it’s not blockchain specific and it’s not a company that deals solely in payments, investing, cryptocurrency or blockchain technology.
Saylor (and many other CEOs of publicly traded companies) are smart enough to know that their number one job is to create value for their shareholders. If that means holding large amounts of Bitcoin to help do that, they will. MicroStrategy is a company with a $4.45 billion market cap whose Bitcoin holdings have doubled in value since the company started investing.
Add to all this the fact that large fintech companies like PayPal and banks like J.P. Morgan, both of whom denounced the value of Bitcoin for years, are now extolling its virtues and recognizing the value of investing in it.
If you thought seeing a few billion dollars being thrown around in 2020 was big, wait until the next pullback happens and watch it closely. It likely won’t be as drastic as the one we saw at the beginning of the coronavirus outbreak last March and there will likely be fewer of those pullbacks in the years to come as institutional investors continue to eat up Bitcoin any time there’s a discount in the market.
What Will the Next Big Pullback of Bitcoin’s Price Look Like?
Make no mistake about it, we here at Netcoins love talking about every single time the price of Bitcoin pumps and the mass adoption continues. But as any investor knows, what goes up must come down.
Political and economic uncertainty always make investors sweat. With two weeks to go before President-elect Joe Biden’s inauguration, supporters of President Donald Trump are standing outside of Capitol Hill (even managing to get inside) rioting. It’s clear that Trump won’t be letting go of his presidency easily and that could be the fuel that sends all investing markets plummeting at least in the short term.
Current events aside, it’s not uncommon to see Bitcoin plunge 30% to 40% after such a monster rally. That’s exactly what happened back in 2017 when the price reached a then all-time high of about $26,000 Canadian. The good news this time is that a 30% pullback would only set the price of Bitcoin back to where it was just before Christmas.
The other thing to consider is that pullback will just afford whales and institutional investors alike another opportunity to purchase more Bitcoin at a discount. This time around, a fundamental shift in the way people view cryptocurrencies likely makes even a large pullback all but temporary in the long run. Expect a big dip over the coming months, but don’t be surprised if it doesn’t last as long as the dips that came before it.
Will a Government Try to Ban Crypto Again This Year?
With the price of Bitcoin being where it is now, people forget that less than four years ago, China announced it would ban cryptocurrency exchanges. The country has always been a big stronghold for Bitcoin as Chinese investors aim to keep their wealth to themselves as much is possible. Will China try to ban crypto again this year? What about other nations?
It’s very likely that some countries will put forward regulations trying to quell investors from hiding the proceeds of their cryptocurrency investing or trying to make it illegal to invest in cryptocurrencies at all. This may suppress the volume of wealth being transferred into the cryptocurrency world temporarily.
However, as Bitcoin is continually proving over and over again, it cannot be stopped or censored for too long. Governments can only slow down adoption, nothing more. Look for some governments around the world to try to do just that again this year. Especially if prices keep rising from here and the world begins to experience more and more fallout resulting from economic uncertainty.
More and More Investors Will Take a Look at Ethereum
Sure, this Progressive Investor post is supposed to be about Bitcoin. Let’s be honest though, when Bitcoin coughs, Ethereum sneezes. At the time of this writing, the price of one Ethereum token is hovering around $1,500 Canadian. That’s a 95% increase in price over the last 30 days.
Price aside, more and more publicly traded investing firms are coming up with ways to offer access to Ethereum via the stock market. The project itself is showing that it has fundamental value thanks to two important developments in the world of cryptocurrency. One being the creation of decentralized finance and all of the lending, borrowing and investing opportunities that come with it. The other being the creation of cryptocurrency derivatives, which allow investors to pour capital into different projects and cross the boundaries of different blockchains without having to leave the Ethereum environment.
These two occurrences along with the fact that institutional investors will treat Ethereum as the silver to Bitcoin’s gold are going to act as catalysts that see the price of ETH skyrocket many times over in 2021.
Bitcoin to $100,000 and Beyond
A $100,000 Bitcoin means that the market capitalization will reach about $1.7 trillion in 2021. Consider that in just the last month or so, we’ve seen that market capitalization double from about $427 billion to $858 billion. Doubling that again makes Bitcoin’s market cap $1.7 trillion. It’s really not a far stretch to say that we will get there by the end of the year because institutional investors already investing in Bitcoin will keep buying the dip. On the other hand, those that haven’t invested yet will continue to realize that they don’t want to be the last ones to join the party.
If There Was Ever a Year to Start Buying Bitcoin for the First Time, Let 2021 Be That Year
Nobody can predict exactly what’s going to happen in both the crypto or financial markets on any given trading day. That being said, 2021 is the year to start buying Bitcoin if you’re not already doing it. Even if you only do it to learn about what the blockchain is and further your understanding of the basic fundamentals of decentralized currencies, make a new year’s resolution to engage in first-hand learning.
Add that learning opportunity to the fact that Bitcoin is proving year after year how resilient and profitable it can be for investors, and there’s almost no reason not to buy Bitcoin with Netcoins.
It’s a cryptocurrency exchange in Canada that will allow you to become a progressive investor if you aren’t already. It’s also an easy way to add to your holdings if you’re HODLing for the long haul.
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Writer, content marketing at Netcoins.