Bitcoin- Outrageous to Some, a No-Brainer for Backers
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.
The following written content by Gertrude Chavez-Dreyfuss / Reuters via U.S. News and World Reports
NEW YORK (Reuters) – 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.
It’s a wager that has drawn eye-rolls from skeptics who believe the volatile cryptocurrency is a speculative asset rather than a store of value like gold.
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.
Bitcoin is within sight of its all-time peak of just under $20,000 hit in December 2017. It debuted in 2011 at zero and was last trading at $18,415.
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.
Citi technical analyst Tom Fitzpatrick said in a note last week that bitcoin could climb as high as $318,000 by the end of next year, citing its limited supply, ease of movement across borders, and opaque ownership.
Those numbers though are a head-scratcher for Toronto-based Kevin Muir, an independent proprietary trader.
“Any hedge fund model on bitcoin is rubbish. You can’t model a mania,” Muir said. “Is it plausible? For sure. It’s a mania. But does anyone actually have a clue? Not a chance.” Read more from U.S. News and World Report.
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