After poising to decisively retake $10,000 last week, Bitcoin crashed on Wednesday.
The cryptocurrency, due to fears that pseudonymous coder Satoshi Nakamoto was dumping his coins, plunged from $9,800 to $9,100 in a move that liquidated dozens of millions.
While less than 50% of the drop has been recovered, a confluence of fundamental demands could drive Bitcoin higher, potentially towards its $14,000 2019 high.
Fundamental Factors Could Boost Bitcoin Past $10,000, Then to $14,000
According to a recent research note from cryptocurrency fund BlockTower Capital, there is a perfect storm of fundamental drivers that are likely to increase Bitcoin demand in the coming months:
BTC has begun to decouple from traditional investment markets, namely equities.
Geopolitical tensions could flare between China and the U.S. once again as accusations over COVID-19 ramp up.
The world is becoming increasingly acclimated to digital technologies, meaning cryptocurrencies make that much more sense.
Small emerging market economies are starting to flag, with collapsing foreign currencies and social unrest, making Bitcoin a potential safe haven.
There has been an “erosion of trust in central banking.”
An exact price prediction was not conveyed. But the firm explained that should the $10,500 resistance break — winch would signal increased demand for Bitcoin due to the aforementioned factors — “the next target would be the 2019 summer high of $14,000.”
$14,000 Is Actually Quite Low
$14,000 may be nearly 50% higher than Bitcoin’s current market price, but some say that the cryptocurrency is heading much higher in the near future.
Tuur Demeester — founding partner of BTC alpha fund Adamant Capital — recently remarked that he thinks $50,000-100,000 is an entirely logical price for Bitcoin to rally towards:
“I think a price target of like $50,000 is not insane at all, especially given just how crazy the money printing is. I would even say between $50,000-$100,000,” the investor told research firm Messari in an interview to commemerate the halving.
Demeester optimism boiled down to two trends, as alluded to in his comment:
Governments and central banks have been printing more money than ever before to combat the economic effects of COVID-19. Bitcoin, as an absolutely scarce asset, stands to benefit.
Institutions are flooding into the cryptocurrency space with a “land grab” mentality. Again, Bitcoin stands to benefit due to its scarcity.
As it stands a $50,000 price for BTC may seem something like a quixotic dream, but the analyst’s investment track record should not go understated.
Demeester first entered the crypto space in ~2011, when he recommended $5 Bitcoin to his followers of the newsletter he was writing at the time.
More recently, in November 2015, Adamant Capital shared a report entitled “How To Position For The Rally In Bitcoin.” The report’s core idea was that BTC should be in the portfolio of many investors. November 2015 marked the start of an over 6,000% rally over two years from $300 to $20,000.
And early last year in April, Demeester’s team published another report. This report suggested that BTC would soon enter a bull run due to on-chain data and historical analysis. The cryptocurrency rallied approximately 200% in the two months after Adamant’s report was shared.
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