2020 was great for crypto enthusiasts and investors, as bitcoin peaked at over $ 29,000. Many institutions put their weight in the markets by converting a portion of their reserve funds and liquid cash into bitcoin in anticipation of a new era powered by digital assets.
The meteoric rise of cryptocurrencies has sparked arguments from analysts and enthusiasts. What can we expect in 2021? Will the uptrend continue or will we witness a massive price correction similar to 2018?
Fundstrat Global Advisors Managing Partner and Research Director Tom Lee shared his thoughts on the future of bitcoin in 2021 with CNBC.
According to him, 2021 will be reminiscent of 2017 and much better than 2020. He predicts a 300% increase in valuation by 2021. This means that the price of bitcoin will reach around $ 120,000.
When asked if his answer was based on the inverse nature of the relationship between the dollar and bitcoin, Tom responds:
“It is going to be part of this for two reasons; But the most important factor is that, this year, we saw a lot of liquidity from the central bank, the dollar was very strong for much of the year, but its weakness now will make people think: How do you maintain a solid money unit? Many people thought that gold would be that store, but I think that for younger people and those who are from the digital generation, bitcoin is that digital asset that they want to keep as a store of value.
Tom Lee also hints at what to expect if there is a price correction or a major drop in the stock market. He says that while the bitcoin holder base cannot be compared to traditional asset investors, the latter's effect on bitcoin is often evident. This is because many potential bitcoin buyers can base their decision on the trend of the stock market.
If Tom Lee's prediction comes true and bitcoin soars 300% to $ 120,000, bitcoin's market capitalization will cross the $ 2 trillion mark and be on par with some of the world's largest companies.