Bitcoin (BTC) May Plunge More Than Rally, Say Experts
Given Bitcoin’s highs and lows in its more than a decade-long history, the question looms large for investors whether it presents riches for rags. When BTC was conceived in 2009, it was hoped to be perceived as a digital currency that would replace fiat currency not controlled by a Central bank or government.
But that is not the case in 2021, where the media and the government see it as a complex piece of fintech product. Though some see it as digital gold whose value has rallied over the years, the BTC price prediction remains highly unpredictable. BTC’s first two halves till 2019 saw the digital gold’s price spiral and the third halving in 2020 presents immense possibilities for another spike.
One striking analogy with gold is that it too is a finite resource and there can be only 21 million BTCs in circulation. Like gold, Bitcoin too is mined albeit virtually through computers processing power with the intent to crack computer encryptions. With the growing awareness of BTC many companies have started accepting it as an alternate payment method.
Facebook’s Libra is managed by some large organisations subjected to government regulations unlike BTC which is based on a decentralised P2P network and has a definite apolitical supply schedule. BTC promoters have focussed on the soundness and stability of the system, at the cost of protocol upgrades. Despite this, three new Bitcoin improvement proposals are scrambling to be included in the BTC core code—Taproot, Schnorr and Tapscript.
Experts’ Take On Bitcoin Price
The digital darling BTC got a break from recent market turbulence thanks to a rally in decentralized finance (DeFi) tokens. Small gains in the price of Ethereum (ETH) and Bitcoin (BTC) might have raised market sentiments, but currently the top-of-the-line digital assets are being retarded in their movements and face stiff market resistance.
Bitcoin value rose significantly from its low neck figure of $35,645 on June 1 to a high of $39,478 while ETH too gained similarly to settle back at the $2,800 levels. Some experts foresee a continuation of the 2021 bull market in view of the steady rally, yet others predict a bearish pennant formation on the Bitcoin chart which could see the digital gold dive to $16,000.
Goldman Sachs On Bitcoin
Citing that gold is a ‘risk-off’ hedge as opposed to copper that is a ‘risk-on’ inflation hedge, the commodity head of Goldman Sachs said that BTC is likely to replace copper and not gold or fiat currency. Copper like oil has seen price fluctuations over the years, and BTC which only has a 11-year price history is seen as volatile and is not considered as a safe investment like gold although it is a hedge against inflation. The supply of raw materials like chips and commodities leads to bad inflation and gold is a hedge against it. However, considering that BTC has given average returns of 250% y-o-y since its inception, it is unusual that Goldman Sachs has compared BTC to copper.
