Although Bitcoin has had a rough start to 2018, experts believe it will reach $100,000 by the end of the year.
Bitcoin fell to $38,000 on Friday as investors grapple with rising inflation and geopolitical tensions. In recent months, the crypto market has been closely following the stock market, making it more connected to global economic factors such as Russia’s war in Ukraine.
Minutes of the Fed’s March meeting revealed its plan to reduce its balance sheet by $95 Billion each month to combat inflation. The latest inflation report also showed that consumer prices increased 8.5% over the past year to March.
Experts predict that the volatility caused by war, inflation and shifting monetary policies in the U.S. will continue to increase with no sign of an end, even though there is no end in sight.
Armando Aguilar is the head of alternative strategies for Ledn. Ledn is a digital asset-saving and credit platform. The largest correlations to Bitcoin have been found in the S&P 500 (0.88%) and NASDAQ (0.91%), respectively. Correlation of one signifies that they move in the same direction.
Bitcoin has been below $45,000 for only a few brief periods over the past four month and has not been above $50,000 since December 25, 2021. Bitcoin is still above its December 25th low of $34,000, which was just six months ago. While there have been many ups and downs in Bitcoin’s price, it is still well below its November all-time high of $68,000. Even with recent price declines, Bitcoin remains more valuable than it was just two years ago. These ups and downs in Bitcoin are not new.
Many experts believe that Bitcoin is still on track to surpass the $100,000 mark despite the volatility and recent price slump. However, there are varying opinions about when this will happen. A recent survey by Deutsche Bank revealed that 25% of Bitcoin investors think Bitcoin prices will reach $110,000 within five years.
Experts say volatility is not new and that new crypto investors need to be cautious about allocating a portion of their portfolio to cryptocurrency. Bitcoin has experienced a steady rise in its value over the years, just like any other cryptocurrency. Bitcoin investors should be curious as to how high it will eventually go.
Bitcoin’s price is difficult to predict, and more vulnerable to market factors than other asset classes. We decided to consult experts and get their best guesses. Here are their answers:
Predictions for Bitcoin’s Price
It was not difficult to predict that Bitcoin would reach $100,000 in value late last year after it hit its highest point in November. The prediction game has become more difficult with Bitcoin’s dramatic fall in the last year.
Some crypto skeptics believe Bitcoin will plummet to $10,000 by 2022. Others think it is possible to still see Bitcoin reaching $100,000, as many experts predicted last year. However, this could be a compromise.
“The most experienced educators in the space are anticipating $100,000 Bitcoin in Q1 2022, or sooner,” Kate Waltman (a New York-based certified accountant who specializes on crypto) told us in November 2021.
Bullish experts are now reassessing the crypto industry as major corporations such as Nike and other large brands look at how to monetize products in the digital realm. Altcoins are gaining popularity due to the rise of metaverse worlds, products and experiences. This has influenced investors’ views on Bitcoin (also known as the original crypto).
Experts aren’t always able to predict Cryptocurrency prices & charts, but they do point to Bitcoin’s increasing value over time. Investors can expect a “pretty steady” increase in Bitcoin’s value over time driven by organic market movements. The $100,000 threshold is in sight, according to Jurrien Timmer (director of global macro at Fidelity Investments).
Kiana Danial, founder and author of Cryptocurrency Investing For Dummies, says that Bitcoin will bring volatility in the short-term and growth long-term.
These are more predictions that we have found. They range from low to high and are ranked over the next 12 months.
Ian Balina
Point of view: Bitcoin investor, founder of Token Metrics, a crypto research and media company
Prediction: Bitcoin could reach $100,000 to $150,000, but the timeline remains unclear
Why? While Bitcoin is currently in a bearish mood cycle, the overall crypto market and all other crypto asset classes remain positive. Although Bitcoin was the first cryptocurrency to be created, others have now surpassed it in innovation for what experts refer to as “Web 3”, or the new blockchain-based internet. Bitcoin will rebound eventually due to the hype surrounding the metaverse and the release of altcoins.
Matthew Hyland
Point of view: Technical analysis and analyst for blockchain data
Prediction: Bitcoin could reach $100,000 by 2022
Why? The Bitcoin price in January 2022 was almost the same as it was in January 2021. However, there is a new demand to altcoins. Hyland stated in a tweet that there is a trend in Bitcoin supply leaving major exchanges. This could be presumably because bitcoins are stored offline in crypto wallets. Hyland also tweeted recently that a drop below $40,000 could cause a “free fall” to a Bitcoin bearish market.
Robert Breedlove
Parallax Digital is the founder and CEO of digital assets marketing and consulting company Parallax Digital.
Prediction: $307,000 in October 2021 (now past), and $12.5 Million by 2031
Why? Inflationary pressures following COVID-19 will drive cryptocurrency interest, Breedlove stated in an interview earlier in the year. This will increase Bitcoin’s value beyond what previous projections had predicted. Breedlove is a crypto enthusiast’s philosopher. He often speaks about the wider social implications of crypto as a decentralized, transparent currency. However, his price predictions aren’t always accurate.
JPMorgan and Bloomberg have also made predictions about the future. Bloomberg predicted a $400,000 high if the currency rises at the same rates as the past.
Pro Tip
Even if Bitcoin surpasses $100,000, you should still be focused on building your overall portfolio, including passive index funds and emergency savings.
What Factors Influence Bitcoin’s Value
The price of cryptocurrency is affected by normal economic factors just as any other investment or currency — supply and demand and public sentiment. Market events, news cycles, scarcity and many more.
Bitcoin is a brand new asset that has a higher value than any other security or currency. These are some of them:
Scarcity
There are currently only 18 to 19 millions Bitcoins in circulation. Minting will cease at 21 million. This built-in scarcity is a major reason why cryptocurrency is so popular, according to industry experts.
Alexis Johnson, president and CEO of Light Node Media, a blockchain public relations and events firm, stated that “there’s a fixed supply, but increasing demand.”
Experts agree that Bitcoin is valuable because people value it. Nelson Merchan, co-founder of Johnson’s Light Node Media, says that this is why everyone buys Bitcoin. This can make it difficult to determine whether Bitcoin or other cryptocurrency is legitimate. Supply and demand is only valid when there is a need for something that doesn’t already exist.
Merchan said that Bitcoin’s origins almost seem like a fraud. Merchan claims that his crypto holdings have reached millions of dollars since he started investing in 2017. However, he has also witnessed them disappear in a flash.
Merchan states, “I believe that crypto is a volatile market and that any amount of money that you have can be lost in a matter of hours.” Certified financial planners recommend that crypto be allocated only 1% to 5% in your portfolio, to protect against volatility.
Mainstream Adoption
Waltman says that one of the major factors behind the rise in Bitcoin’s price is the pace at which new users are exploring and buying cryptocurrency.
She says that “crypto technology is being adopted at an even faster rate than when humans first adopted internet technology.” If this trend continues, Bitcoin’s value could continue to rise as a result of the increasing adoption.
According to CoinShares data, Bitcoin adoption is increasing at an annual rate 113%. People adopted the internet at an even slower rate (63%). The report claims that Bitcoin will grow in popularity at a similar rate to its early days (or faster) and that there will be approximately 1 billion users by 2024, and 4 billion by 2030.
CoinDesk reported that the number of wallets in use worldwide has increased by 45% between January 2020 and January 2021 to an estimated 66,000,000. Coinbase, a popular crypto exchange, claims it now has more than 73 million users worldwide. Gemini released their “State of U.S. Crypto Report” recently which revealed that 21.2 million Americans have some form of cryptocurrency.
Regulation
In recent months, federal officials made it clear that they are closely watching crypto. Recent industry professionals have suggested that Bitcoin’s low price is due to “hawkish” federal regulation. CoinDesk First Mover Seth Ginns, CoinFund managing partner, stated that “the Fed moved into a hawkish [on crypto regulation] just when Omicron started ticking up in the U.S.” This could have raised doubts about crypto as an asset and led to January’s bearish sentiments.
There are many unanswered questions about crypto regulation. President Joe Biden signed an infrastructure bill that requires all crypto exchanges notify the IRS about their transactions. Janet Yellen, Treasury Secretary, recently stated that stablecoins, a type crypto linked to the U.S. Dollar’s value should also be subject to federal oversight.
According to Flourish, an industry platform for financial advisors, the conversation about regulatory policies is “patchy.” Any new regulation can have a significant impact on value, especially when it comes to cryptocurrency, a relatively new asset.
For example, when China banned cryptographic currencies in September 2021 investors saw Bitcoin’s price drop. However, it has since rebounded and is now experiencing its normal volatility. Although there is a lot of precedent for Bitcoin, Securities and Exchange Commission takes all decisions on a case by base in what experts call its “crawl walk, run” strategy towards mainstream adoption.
“[Regulation] has kind of evolved over five years,” Ben Cruikshank of Flourish says. “Regulators have the ability to change their minds.”
Mining Cycles
The halving cycle is another factor that can affect Bitcoin’s value. Although it’s complex and algorithmic, halving is an important step in Bitcoin mining that reduces the reward for Bitcoin transactions.
The rate at which new Bitcoin coins are introduced to the market can be affected by halving. This could impact the value of Bitcoin holdings. In the past, halvings have been associated with boom and bust cycles. Experts attempt to predict these cycles right up to the day after a halves event ends.
What investors need to know about Bitcoin price projections
Financial planners and other experts warn against allowing Bitcoin’s price fluctuations to influence your decision-making. A strategy known as dollar cost averaging has been proven to improve the performance of passive index funds and ETFs over time.
Experts recommend that you don’t invest more than 5% in cryptocurrency. It is also a reason why it is important to save for emergencies and pay down high-interest debt. People with diversified investments such as low-cost index funds are more likely to be successful in long-term wealth building and retirement savings. Crypto is a small part of the overall path.
Experts agree that a “set-it-and forget-it” approach to crypto is a good idea. Sarah Catherine Gutierrez, a certified financial planner based in Arkansas, says passive investing is a valid way to reach financial goals.
It’s okay to wait to see what happens before you put your money up. Crypto is still a new concept to many people. There is only 10 years worth of data available to make predictions about crypto prices. The value of Bitcoin can also fluctuate from day to day, even though it may rise in the long-term.
It is difficult to understand the “what” or “why” behind your crypto strategy because of volatility. Ask yourself what you are looking to gain from investing in Bitcoin and other alternative assets. This will help you stay focused.
Gutierrez says that “I don’t believe people understand across-the-board how to value [Bitcoin],” Gutierrez said. It is important to understand your expectations about the value of the product you are buying when you buy it.
Gutierrez states that financial planners are not biased against cryptocurrency, especially if clients express an interest in learning more. But, it is important to ask yourself if you really need cryptocurrency in your plan. Gutierrez says that in most cases, the answer is “no”.
She says that Bitcoin is not necessary to achieve financial goals. However, she adds that most people should prefer simple methods of investing that are easy for them to understand. This will help you stay on track for your core financial goals, and it will also position you for a long-term healthy retirement.
