Bitcoin investors, which include top hedge funds and money managers, are betting the virtual currency could more than quintuple to as high as $100,000 in a year.
Since January, bitcoin has gained 160%, bolstered by strong institutional demand as well as scarcity as payment companies such as Square and Paypal buy it on behalf of customers.
Going from $18,000 to $100,000 in one year is not a stretch, Brian Estes, chief investment officer at hedge fund Off the Chain Capital, said.
“I have seen bitcoin go up 10X, 20X, 30X in a year. So going up 5X is not a big deal.”
Estes predicts bitcoin could hit between $100,000 and $288,000 by end-2021, based on a model that utilizes the stock-to-flow ratio measuring the scarcity of commodities like gold. That model, he said, has a 94% correlation with the price of bitcoin.
Investors like Stanley Druckenmiller, founder of hedge fund Duquesne Capital, and Rick Rieder, BlackRock Inc’s chief investment officer of global fixed income, have recently touted bitcoin.
Retail investors though are still mostly sidelined due to the pandemic’s effect on the economy. But with the entry of Square and PayPal, Lennard Neo, head of research at crypto index fund provider Stack Funds, expects a deluge of retail demand more intense than in 2017.
Neo forecasts bitcoin to reach $60,000-$80,000 by the end of 2021.
Tempus Inc currency trader Juan Perez was unimpressed, even shocked, with all the lofty forecasts and said a bet on bitcoin at $100,000 next year would be a bet on the collapse of the global financial system.
“Governments around the world won’t let that happen. They will not let fiat currencies collapse just like that,” Perez said.
