Bitcoin breaks past record of $ 64,000: is $ 100,000 in sight?

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Bitcoin broke the previous high of $ 64,000, creating expectations that the world’s leading cryptocurrency is poised for further gains. Overnight it traded at around $ 66,000 before giving up some gains, but still trading above the high reached in May.

The asset class, which has surpassed virtually all others by a mile, started life just over 10 years ago in cents. But after growing by leaps and bounds, it now begs the question: what’s next?

Could he withdraw $ 100,000, $ 200,000 or $ 500,000? If so, by when? Or is it possible that bitcoin, like many other asset classes in the past, is a fad, a fad that will die out over time and then crumble to zero?

Momentum is bitcoin’s nemesis

Whether bitcoin will rise or fall in the long run remains to be seen, but one thing is for sure. It is a very volatile asset class. This volatility gives bitcoin a lot of momentum, whether it’s up or down. Consider this: In May, bitcoin rose to $ 64,000 for the first time, a breathtaking year-over-year rally that saw it rise 10 times.

But a combination of news – including the fact that Elon Musk, one of the world’s most vocal and visible cryptocurrency proponents was returning in his support for bitcoin – resulted in a crash to $ 28,000 in just a few minutes. month. Immediately, it surpassed $ 64,000 again, inflated by a slew of positive news, including the launch of the world’s first Bitcoin Futures ETF.

It is this momentum that could potentially lift bitcoin to higher levels, given that the cryptocurrency has seen a slew of good news, including its ever-increasing integration with financial systems.

The technical view

Analysts have looked at a series of technical indicators to assess the price level of bitcoin in light of its charts and price dynamics. For example, its Relative Strength Index, which is considered a buggy for dynamics, is currently at 73. A reading above 50 indicates positive dynamics, while a reading above 80 indicates overbought territory.

Analysts are also looking at the price of bitcoin in light of its four-year halving cycle, where mining rewards are halved. From a halving cycle perspective, since bitcoin broke through $ 20,000 in December 2017, a valuation fixes bitcoin at $ 200,000 in the near future.

According to Twitter user TechDev, who writes frequently about cryptocurrency, bitcoin exceeding $ 200,000 “seems almost too programmed.”

There is another valuation method used by bitcoin analysts: the stock-to-flow (S2F) model. To determine and forecast the price of BTC, it takes into account the number of coins in circulation and the influx of newly minted coins.

According to the S2F model, Bitcoin could hit the $ 100,000 mark by December 2021. This technical analysis model had suggested that BTC should be around $ 88,000 by July of this year. But several factors, including China’s crackdown on bitcoin mining, caused the market to fall. However, analysts believe BTC came out stronger from China’s anti-crypto measures.

The fundamental factor

Bitcoin has seen a slew of positive news. From its adoption as legal tender by El Salvador until the recent launch of the Bitcoin Futures ETF, the cryptocurrency world has believed that the acceptance of bitcoin as an asset class, or even a medium of exchange potential, or store of value, is very likely.
The other thing investors need to look at is the acceptance of not only cryptocurrencies, but also other solutions made possible by blockchain technology, as a sentiment indicator. In recent years, the emergence of decentralized finance, backed by blockchain, has given rise to many solutions, such as non-fungible tokens (NFT) etc.

The bear case

While the momentum and news flow appears to be in favor of Bitcoin, investors should remember that it inherently has a very volatile class, which means it could be subject to rapid crashes even if it does. increases in the long run. This means that investors – who often tend to act en masse – could come out on top, drawn by recent gains, and come out in panic after a crash, starving themselves of gains.
The other thing to remember is that bitcoin is a fundamentally new asset class and has no cash flow like stocks. This means that its value largely comes from the perceived store of value. In other words, people can buy bitcoin because they think it’s going to go up, which pushes the prices up. These perceptions can change quickly, especially when prices fall. And in the long run, its true value will only emerge if bitcoin has truly been able to demonstrate its usefulness not only as a speculative asset class but also as a technology that has many use cases in society. Without it, its price could drop as fast as it rose.

What Should Investors Do?

Investors shouldn’t ignore cryptocurrencies as an asset class and bitcoin can become a small part of their wallets. But it is important not to overdo it. Invest only the money you can afford to lose.

(Edited by : Yashi Gupta)


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