Earlier in the current week a forecast came from one of the Bloomberg senior strategists which has caused much commotion among the financial gurus. Now that Bitcoin price is at the important levels, these expectations that soon it can reach for $81,000 have been the center of attention for many investors and analysts. Now let us explore the possibilities as to why such a drastic rise of the price is possible and analyze how likely this prognosis is to be realized.
The Basis for the $81K Prediction
This bold Bitcoin forecast has been made by a Mike McGlone, a Senior Commodity Strategist at Bloomberg Intelligence. McGlone has always had an accurate track record of his market calls and his recent forecast points to a rally in the price of Bitcoin. McGlone has identified several metrics that are converging to suggest that Bitcoin could hit $81,000 in the near future as identified below.
Among other things, this expectation is founded on the persistence of the institutional adoption of Bitcoin. In the last few years, BTC moved from being an experimental currency to a digital currency with properties similar to those of precious metals or gold. We have also seen, institutional players adopt this digital asset as investors saw great potential in it to act as an inflation hedge and protect against the current uncertain financial circumstances as seen from MicroStrategy, Tesla, and Square.
Bitcoin’s Supply Dynamics
The other compelling evidence that works in support of McGlone’s prediction is the availability of the supply of Bitcoins. Besides, the bitcoin has limited units that can ever be produced in the market with a maximum of twenty-one million units. This coupled with the halving events whereby the rate of Minting of the bitcoins is cut in half has in the past forced up the prices. The last halving occurred on May, 2020 that reduced block reward from 12. 5 BTC to 6. 25 BTC, and it reduced the amount of the new supply of Bitcoin in circulation. McGlone’s fundamental view is that this supply-side dynamic is accompanied by demand-side factors such as institutional and retail adoption of Bitcoin, that could take the price of this digital commodity to new highs.
Macro-Economic Factors
Another significant factor that defines McGlone’s forecast is the macroeconomic setting. As the Inflation rates are escalating all over the world due to Unprecedented Monetary Easing and Fiscal Stimulus to Counter COVID-19 Impact, majority of the Investors are looking for safe Havens to save their Wealth. Due to its limited supply, and decentralized design, Bitcoin has become one of the most preferred instruments for inflation hedge. Further, the unpredictable situation in geopolitical arena and the traditional financial markets help to cement the Bitcoin’s position as one of the best safe-haven assets.
The Role of ETFs
Bitcoin ETFs (Exchange-Traded Funds) have also played their part in the change, especially their approval and subsequent listing. It simplifies the accessibility of Bitcoin for institutional investors as it gives them the exposure to Bitcoins without having to physically own Bitcoins in the form of Bitcoin ETFs. It has made Bitcoin more liquid and less volatile after the launch of multiple Bitcoin ETFs in the market for everyone’s investment. McGlone, therefore, feels that these financial products, if allowed and popularized further, could be the reason for the next push up for the bitcoin price.
As was analyzed, there are several facts which support the assumption that the forecast is correct.
From a technical perspective, the outlook of the Bitcoin’s price seems quite bullish and the cryptocurrency may continue its upward movement in the upcoming period. There’s clearly indication that Bitcoin has remained above the 200-day moving average according to McGlone, the sign of long-term bullishness. Furthermore, using the relative strength index, it can be noted that Bitcoin is not in an overbought territory which opens possibilities for additional price increase.
McGlone also states that the Relative Strength Index (RSI) signal also looks like past bullish patterns before any bull run in price. However, if there can be a repetition of history the prices might peak again to achieve the $81,000 as tabled below.
Risks and Considerations
Obviously, $81,000 is an intriguing prospect, yet, the idea is to understand the possible difficulties and drawbacks the Bitcoin price can face on the way to this value. Regulations remain a major challenge to the growth of this market as the different governments around the world try to figure out how to regulate this emerging market. Any negative regulation change that may occur could be detrimental in the sense that investors would be triggered to selling securities.
Furthermore, the price of the Bitcoin is unpredictable and regular steep decline of its value happens frequently. The long-term trend is definitely positive, but short term fluctuations in price could pose great danger especially to investors who have not factored in the volatile nature of cryptocurrency market.
Final Thoughts
Bloomberg’s correct prediction way back July that Bitcoin would soon hit $81,000 is based on many factors such as growing institutional uptake, supply side specifics of the bitcoin, proper macro economy and positive technical aspects that are as follows. Nevertheless, any market prediction involves some amount of risk and therefore one has to be careful when approaching it. Whether or not Bitcoin reaches this target remains to be seen, but one thing is clear: it remains the main subject of people’s discussions and concerns in the sphere of finance with the ability to redefine the world of currency.
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Disclaimer!! The information provided by CryptopianNews is for educational and informational purposes only. It should not be considered financial or investment advice. Cryptocurrency markets are highly volatile and speculative, and investing in them carries inherent risks. Readers are advised to conduct their own research and consult with a qualified financial advisor before making any investment decisions.
Riz-A is a seasoned blockchain content writer with a passion for demystifying complex concepts and making cutting-edge technology accessible to a broader audience. With years of experience in the blockchain and cryptocurrency space, Riz-A has a proven track record of creating engaging, informative, and thought-provoking content.