Bitcoin eyes $50k in 2021

Bitcoin’s bid to smash through the $20,000 ceiling for the first time, its highest ever, has certainly made hopes higher for those who have been actively investing in it.

The cryptocurrency jumped 4.5 per cent to move as high as $20,440 on Wednesday, and has gained more than 170 per cent this year, buoyed by demand from larger investors attracted to its potential for quick gains, purported resistance to inflation, and expectations it will become a mainstream payment method. The currency hit $23,238.50 on Thursday.

Bitcoin’s blistering rally has seen a massive flow of coin to North America from East Asia, fuelled by hunger for bitcoin among bigger and compliance-wary US investors. The rally in bitcoin, which some investors have seen as a potential safe-haven, has coincided with spot gold’s drop in recent months too.

Industry experts in the region strongly feel that the rally will continue into the next year to achieve new peaks. “Cryptocurrencies particularly Bitcoin, Ethereum, XRP have shown strong momentum in the last couple of weeks,”said Arshad Khan, co-founder and CEO of Arabian Bourse (ABX).

“Good thing about this rally is it’s not merely based on speculation but is driven on strong fundamentals of use cases of these currencies and emergence of Bitcoin as a store of value. This has attracted strong demand from institutional investors,” Khan.

“Data from exchanges show that not many holders of cryptocurrencies are in mood to cash out and book profits. This shows the anticipation of prices moving upwards is more than going down. Similarly data from futures market is showing possibility of prices going up. With more cryptocurrencies being added in futures trading the market is becoming more matured and offering hedging mechanism for traders to benefit from. Lending and borrowing of cryptocurrencies has become another good source of income for the coin holders.”

ABX shall be set up under the Abu Dhabi Global Market (ADGM) in the UAE, and aims to be a fully regulated crypto asset MTF and custodian primarily focused on global institutional and retail traders. ABX has received in-principal approval from Financial Services Regulatory Authority of ADGM and is currently setting up the business and infrastructure before commencing live operations.

“Recently Bitcoin saw millions of dollars being invested by MassMutual, Ruffer Investment, and other such financial institutions. Large global banks like DBS, SCB, JP Morgan, and others announced their foray into Crypto. Some have started offering Cryptocurrencies as a product to clients, others are offering custody, financing or banking services for this asset class.With a defined limited supply Bitcoin stands better than precious metals like Gold or Silver where supply is limited but finite quantity is unknown. Couple this with blockchain technology and you have a perfect asset class that can dethrone Gold in the long run,” added Khan.

Bitcoin is likely to have another “record-breaking year” in 2021, with prices expected to rise 50 per cent and possibly double with its current momentum, believes Nigel Green, chief executive and founder of deVere Group, one of the world’s largest independent financial advisory and fintech organisations.

The bullish prediction from Green, which has $12 billion under advisement, comes as the original cryptocurrency smashed through the $20,000 barrier on Wednesday for the first time ever. The previous high was in December 2017 when the Bitcoin price hit $19,850.

— sandhya@khaleejtimes.com