2021 Bitcoin Investment Overview: Analysis of Bitcoin Risk and Value from Liquidity and Supply and Demand (www.blockcast.cc)

Bitcoin is an asset with investment value, and institutional investors have successively included it in their investment portfolios.

Original Title: “AAX New Year Special 丨 Overview of Bitcoin Investment in 2021”
Written by: AAX Lab

One global crisis later, matters have evolved. The year 2020 saw bitcoin in action

After a global crisis, the world has undergone new changes. We have witnessed the transformation of Bitcoin in 2020.

Introduction

Although Bitcoin is becoming more and more popular, there are still some people who are skeptical about it. In July 2019, the then-U.S. President Trump expressed his opposition to electronic currencies and tweeted that they were “not currencies” and “promoted illegal behavior.” His remarks seemed to be aimed at the Libra cryptocurrency proposal proposed by Facebook and made comments on the US dollar.

In the same month, the International Monetary Fund (IMF) published The Rise of Digital Money (translation: the rise of electronic money), pointing out that electronic money will change the banking and currency ecology we have always known. Although the report mainly describes the role of the central bank and the discussion of stablecoins, it is worth noting that it describes Bitcoin as a “public token.”

After a global crisis, the world has undergone new changes. We have witnessed the transformation of Bitcoin in 2020. This transformation does not refer to the change of its currency characteristics, but that it has gradually become a safe-haven asset against global economic fluctuations. Unlike 2017, the large increase in the price of Bitcoin is largely due to the promotion of individual investors, and the main driving force in 2020 is the support of institutional investors.

Grayscale successfully sold Bitcoin to millennials in the form of a fund, and its total cryptocurrency asset value (AUM) under management has exceeded US$10 billion. PayPal also announced that it has joined the ranks of supporting cryptocurrencies, allowing users to purchase goods and services through Bitcoin from its 28 million affiliated merchants. Other major corporate and institutional investors, including Oxford University, Square, and billionaire Paul Tudor Jones have also added Bitcoin to their investment portfolios, and Paul Tudor Jones compared investing in Bitcoin to early investment in Apple or Google (Google). Recently, the CEO of Blackrock, the world’s largest asset management company, even threatened that Bitcoin is likely to become a global market asset.

In recent months, many influential reports have provided in-depth insights. In order to give investors a clearer understanding of Bitcoin and how it becomes an asset with investment value, we will synthesize different insights and research data in this article, hoping to promote relevant discussions and strengthen the argument for Bitcoin and its value. Pay attention to some insights that cannot be ignored. Since many people have explained technical terms or discussed simulated investment portfolios, this research will not focus on this category. On the contrary, we believe that it is more appropriate to discuss the development of Bitcoin from a social and political perspective.

In Chapter 1, we will introduce the complexity and importance of Bitcoin from the perspective of concept and valuation. In Chapter 2, we will assess the current status of Bitcoin and its overall overview as an investable asset. In Chapter 3, we will discuss the risks and opportunities of investing in Bitcoin and predict the price trend of Bitcoin in 2021.

Chapter 1: The birth of emerging asset classes

The main value of Bitcoin does not necessarily lie in its potential to become currency

(Bitcoin’s primary value proposition may not lie in its potential as a currency)

Focus

• We should distinguish between the Bitcoin network and the difference as an asset
• Bitcoin is not equal to blockchain technology
• Although Bitcoin has the same characteristics as some traditional assets, it is an independent asset class

Introduction to Bitcoin

Introducing Bitcoin is more complicated than imagined.

First of all, beginners who are new to this concept may not fully understand that Bitcoin refers to a protocol or network, and that it is produced and maintained through protocol technology. More importantly, although this agreement is a revolutionary technology, it is no longer the only or best technology. You can easily find some descriptions of Bitcoin on the Internet, claiming that it has the potential to change the world, but sometimes ignore that its competitors are better in compatibility, use, cost-effectiveness, and security.

Probably because Bitcoin is the most familiar first cryptocurrency, coupled with its anonymity and the mysterious identity of the founder, Bitcoin is still the dominant crypto asset (60%), followed by Ethereum (12%), XRP (5%) and the remaining 7,850 cryptocurrencies (23%).

Therefore, we have enough reasons to continue to regard Bitcoin as an independent encrypted asset, and its value does not only depend on comparison with other evolved altcoins.

Second, based on the first premise, people generally confuse the future development of Bitcoin with the advantages of other blockchain technologies. Although decentralization is the core of Bitcoin’s discourse, we should not use blockchain technology in different industries and supply chains as the standard to determine the success or failure of Bitcoin as an asset. Here, we once again emphasize that Bitcoin itself has enough value to become an asset class. We will discuss the importance of Bitcoin in the next section.

Third, the Bitcoin protocol is a Peer-to-peer (P2P) transaction system that was born in 2009. It is used to trade and settle Bitcoin as an electronic currency, and the entire process does not require a bank as an intermediary. After years of development, we believe that the main value of Bitcoin does not necessarily lie in its potential to become a currency. Ray Dalio, the founder of the world’s largest hedge fund Bridgewater, is known for his keen insight, observing economic growth and recession cycles, and optimistic about the current price trend of gold. He believes that Bitcoin is too volatile One of the people who is not suitable as currency.

Although Bitcoin may indeed develop into the dominant currency, it seems difficult to describe Bitcoin as a currency in line with the views of ordinary Bitcoin investors and users. Instead, it is more suitable to compare Bitcoin with gold. Excluding the volatility of Bitcoin, it and gold have investment value and can be used as a hedge. Bitcoin may be more attractive to speculative investors. . The biggest difference between the two is that Bitcoin will inevitably involve discussions on the level of socio-economic transformation and how to respond to the worries of entering the digital age. I believe this is also a factor that investors should consider.

The overall tendency has been to frame the protocol as a financial safe space and the coin as a potential safe haven asset, or hedge against risk

The overall tendency is to treat the blockchain protocol as a financial security zone, and Bitcoin is used as a safe haven for funds, or as a hedge against risks

The importance of Bitcoin

The birth of Bitcoin coincided with the important time of the global financial crisis. Credible institutions and seemingly strong financial markets collapse, and the Bitcoin blockchain protocol just provides a decentralized system that returns the dominance of important economic activities and responsibilities to individual investors. No intermediary is required. The Bitcoin network has a preset currency system to ensure that Bitcoin can be produced year by year and has a limited total supply of 21 million Bitcoins. Up to now, there are 18.5 million Bitcoins. Was successfully dug out.

At that time, the Bitcoin online community was relatively niche, mainly composed of computer scientists and enthusiasts, so it did not attract public attention, and the use of Bitcoin did not necessarily prevent or reverse the financial tsunami. However, Bitcoin provides more choices for the financial system without being limited by inefficient and outdated systems. At the same time, it provides hope for the generation that perceives outdated financial and monetary policies, inspires innovation, and creates new blockchain-related industries. It promotes people to explore the nature of money, and the popularity of Bitcoin also leads to developments in other areas, including financial inclusiveness, blockchain payments, cross-border transfers, privacy, supervision and dominance.

Extreme Bitcoin advocates are likely to want to see the current financial system completely reformed. Bitcoin can ban the U.S. dollar and become a global stored-value currency, but the overall tendency is to treat the blockchain protocol as a financial security zone and use Bitcoin as a safe haven for funds , Or hedging risks, and history has proven so. Through Grayscale’s in-depth reports, Bitcoin performed exceptionally well during periods of economic instability, including the Greek debt crisis in 2015, the 2016 Brexit referendum results or the 2019 Sino-US trade war.

There are various opinions on the reasons that affect the price of Bitcoin, including worries about capital control, fear of economic downturn, or avoiding the devaluation of legal tender. It is generally believed that Bitcoin can promote market behavior. In fact, past price performance will also affect the public’s perception of Bitcoin. In the early days of the global epidemic, after the US government distributed the first $1,200 bailout money to its citizens to alleviate the impact of mandatory quarantine, large exchanges including Coinbase found that the number of American users who deposited equivalent funds to the exchange had increased significantly.

There is no obvious evidence to determine whether Bitcoin is an Uncorrelated Asset. Depending on the time period, there are times when the price of Bitcoin is completely independent of the traditional market, but when there is a major stock market crash in 2020, Bitcoin will behave in line with the US stock market, and it will also hit a new high in the same period of time. Bitcoin may have evolved into a performance similar to other technology stocks, appearing consistent with traditional markets. On the other hand, Bitcoin also has the same characteristics as gold and can be used as a safe-haven asset to prevent inflation. At the same time, we can also treat Bitcoin as a commodity or luxury product, such as red wine or whiskey. As demand increases and supply decreases, the value of Bitcoin will increase accordingly.

We are not worried about the scarcity of Bitcoin, because it was created in a limited supply. What investors really need to pay attention to is not whether Bitcoin can successfully develop into a universal currency, but whether the demand for Bitcoin will continue to increase in the long run. We believe that the biggest difference between Bitcoin and gold or other commodities is that the development prospects of Bitcoin, decentralized financial infrastructure and true dominance are becoming more and more closely linked, and this asset rooted in the network is regarded as a “digital native The younger generation of (Digital Natives) has a certain appeal.

Bitcoin’s price history is marked by volatility and defiance.

The historical price of Bitcoin has been injected with volatility and rebellious genes.

Chapter 2: Bitcoin-an asset with investment value

Focus:

• Bitcoin has been around for twelve years, surpassing public expectations in 2020 and successfully attracting institutional investors
• As Bitcoin has not yet been regulated and has a decentralized nature, at the current rate of development, it will surpass the large U.S. listed stocks in the near future
• Bitcoin’s valuation framework has not yet been established, because its price not only needs to be assessed from a technical level, but also needs to include social and economic aspects

Historical price: 2009-2019

The historical price of Bitcoin has been injected with volatility and rebellious genes.

For early investors, it is not surprising that Bitcoin sometimes has extreme volatility. When the first batch of Bitcoin was mined, everyone regarded it as an experimental network currency. Although the Bitcoin white paper describes the Bitcoin system and its potential development very carefully, and initially discussed the expansion capabilities, coverage, and valuation of Bitcoin, it does not have a real plan to promote practical applications, and it is not at all like creating a company. Companies or new technologies are the same. It has no exact business strategy or promotion plan, and no one knows whether Bitcoin can be accepted by the mainstream society, or even the chance of success, or what the so-called success looks like.

Bitcoin’s successful entry into the market as a tradable and investment-worthy asset is completely unplanned and without supervision, which is unprecedented in history. It was originally a pure peer-to-peer trading system, and eventually appeared in major cryptocurrency exchanges for public investment.

Looking back now, we can clearly see the development trajectory of Bitcoin, but it was full of uncertainties in the first ten years of its launch, and it is impossible to expect negative news, theft, fraud, exchange hacking incidents, and the crackdown by the regulatory authorities. Causes prices to plummet, and positive comments and media hype can cause prices to skyrocket.

The history of Bitcoin is a story of rebellion. Since its launch, many people have rated Bitcoin as the best performing asset in 10 years. Its performance is indeed brilliant. What kind of asset or market can achieve 9,000,000% return on investment (ROI) like Bitcoin in the past 10 years? From the value of no more than one 10,000th of the price of two pizzas in 2010 to almost $20,000 by the end of 2017, the value of Bitcoin has exceeded expectations.

During the same period, the Standard & Poor’s 500 Index (S&P; 500) only tripled, gold rose by 25%, and the best performing stocks in the Russell 3000 Index (Russell 3000) only generated a return of 3000%. Not on the increase of Bitcoin. It is worth noting that Bitcoin was surprisingly quiet in the first few years of its launch.

Historical price: 2019-2020

The impressive price movement must be an important part of Bitcoin’s creation story. Now entering the second decade, it can be regarded as the adoption period of Bitcoin. The investment community of Bitcoin has grown step by step, and the complexity of investment has also increased significantly. We believe that repeating the statement “If I started investing ten years ago” now will not help. Instead, focus on a shorter period of time.

Let’s go back to 2017, when Bitcoin rose sharply and recorded a record high of $19,783. Stepping into 2018, it seems that the myth of Bitcoin has failed, and the price has fallen sharply, entering the so-called “crypto winter”. We believe that the past two years are very important to the development of Bitcoin, so that everyone is more aware of the current position of Bitcoin as an asset and its future development.

It’s a compelling track-record; what asset or market could possibly match bitcoin’s 10 year ROI of 9,000,000%? Its performance is indeed brilliant. What kind of asset or market can achieve 9,000,000% return on investment like Bitcoin in the past 10 years?

From an industry perspective, financial infrastructure and regulation have made important developments in 2019. Fidelity Digital Assets Services and other well-known custodial service providers, as well as operators that focus on market monitoring, have successively joined the encryption field. In the same year, after Facebook proposed the Libra cryptocurrency, regulators around the world began to put forward more requirements for review, including the Financial Action Task Force’s (FATF) proposed the “Travel Rule” (Travel Rule) to combat money laundering activities; the United Kingdom The Financial Conduct Authority (FCA) provides clearer and safer measures for individual investors; the US Senate has a heated debate on the nature of cryptocurrencies. This year, the bitcoin derivatives market has also developed rapidly, and “institutional” cryptocurrency exchanges including ErisX, Bakkt and AAX have emerged.

In 2019, Bitcoin’s price and transaction volume experienced a recovery and became one of the best performing assets that year. After falling below $3,500 in November 2018, Bitcoin climbed back above $12,000 in July 2019. However, its price failed to maintain its upward momentum and fell to $7,000 at the end of the year.

Bitcoin Chart Bitcoin

Chart source: Coinmarketcap.com

Although 2020 is cast over the shadow of COVID-19, it is a bumper year for Bitcoin.

First of all, Bitcoin completed the third halving in history. According to the agreement, for every 210,000 blocks produced by Bitcoin, that is, approximately every four years, the Bitcoin rewards earned by miners through mining will be halved.

In 2020, the reward for each block will drop from 12.5 bitcoins to 6.25 bitcoins. These pre-determined halving events can effectively reduce the supply of new bitcoins in the market, thereby pushing up the price of coins, or allowing miners to reduce their mining facilities to make up for mining costs. According to past records, the halving event will push Bitcoin to a new price high.

In 2020, we saw expectations around institutional participation as well as bitcoin’s price behavior in the face of economic turmoil come to realization

In 2020, more institutional investors will enter the market and also see the price performance of Bitcoin in response to economic turmoil

On November 30th, Bitcoin once again set a new record high, rising to $19,860 per Bitcoin. Later, on December 20, Bitcoin hit a new high again, reaching $24,200. Although Bitcoin also reached the same price in 2017, the factors driving the price increase this year are completely different.

In 2020, more institutional investors will enter the market and at the same time see the price performance of Bitcoin in response to economic turmoil.

With the gradual improvement of market infrastructure, institutional investors’ interest and attitude towards Bitcoin have also improved, hoping to take the initiative to contact or invest directly in Bitcoin. For example, Microstrategy plans to add 400 million U.S. dollars worth of bitcoin to its investment portfolio; billionaires such as Paul Tudor Jones also use bitcoin as a hedge against inflation. Institutional investors are clearly interested in digital assets.

In addition to being increasingly popular with investors, Bitcoin has also shown resilience during periods of political and economic instability, including the sudden end of the longest bull market in U.S. history, oil prices plummeting to negative net worth, and global debt levels and deficits. Create a new high. The market crash in March dragged down gold and Bitcoin for a while. Investors moved their assets to cash, and Bitcoin was the first to recover. After the digital asset sold off on March 12, it only took 55 days to rebound by about 162%. In contrast, the S&P 500 index only rebounded by 47% after 77 days.

Bitcoin vs. Traditional Asset Comparison

Source: Coinmarketcap.com

It can be seen from the chart that Bitcoin’s growth has surpassed traditional assets, including gold, which has always been regarded as an asset safe haven. According to a Bloomberg report, after the price of Bitcoin rose in the fourth quarter, JPMorgan Chase had warned that the gold market may be affected in the next few years. The reason is that since October 2020, there has been continuous outflow of funds from the gold market. Pour into the Bitcoin market. According to calculations by JPMorgan Chase, Bitcoin currently only accounts for 0.18% of family office assets, while gold ETFs account for 3.3%.

Even if only part of the gold is transferred to the cryptocurrency market, it already means that billions of funds will be transferred, which will cause serious problems for the precious metals market that has been trending in a bull market.

Investors withdrew funds from the gold fund, prompting Bitcoin to set a new record.

Source: Bloomberg

We believe that Bitcoin has entered the “adoption” period. In the first ten years, Bitcoin gradually developed from obscurity, proving its value to those who despised and doubted it. As we enter the adoption period, we can expect Bitcoin to be more integrated with traditional markets and regulated investment communities, but at the same time it will also face more resistance from governments and financial institutions. We believe that the rise of Bitcoin will affect existing The economic power structure poses a threat. We will discuss this issue in more depth in the third part, and will also bring out the risks and opportunities of Bitcoin.

Transaction volume and liquidity

As the Bitcoin market has become more popular and its infrastructure has been greatly improved, its transaction volume and liquidity have also increased significantly. From simple peer-to-peer trading, to trading on the notorious Mt. Gox, and then to today, Bitcoin can be used in hundreds of centralized and decentralized exchanges in fiat currency, stable currency, cryptocurrency and derivatives markets On the transaction. At the time of writing, the total market capitalization of Bitcoin is $440 billion.

At present, ordinary investors can easily buy bitcoins through credit card, bank transfer, PayPal or other payment methods on peer-to-peer platforms, over-the-counter (OTC) platforms or third-party cryptocurrency merchants. Institutional investors generally conduct large-value transactions through stable currency entry and settlement, or through cryptocurrency funds such as Grayscale Digital Large Cap Fund (GDLC) to invest in Bitcoin or other cryptocurrencies. assets.

Although the exchange is booming, providing investors with different bitcoin prices is very consistent with its decentralized characteristics and allows investors to make arbitrage transactions, but it is also difficult for the public to determine its true trading volume. What is more complicated is that various data providers use different methods to calculate and display market data. According to research by ARK Invest, the daily trading volume of Bitcoin can vary from US$200 million to US$12.4 billion, depending on the source of the data.

Average Bitcoin trading volume on mainstream exchanges (July 2020)

Source: Ark Investment

As for the spot market, Bitcoin’s daily trading volume is about US$2 to 3 billion, which is enough to be on par with large technology stocks such as Netflix and Google. However, some people believe that this trading volume is not enough to make Bitcoin an independent asset class. However, according to Ark Investment’s analysis, as Bitcoin’s trading volume triples every year, it is likely to surpass the US stock and bond market trading volume within five years.

The daily trading volume of Bitcoin’s currency market on mainstream exchanges (in billions of US dollars), 28-day moving average

Much like commodities, bitcoin’s price is subject to the raw dynamics of supply and demand

Bitcoin is more like other commodities, and its price is affected by basic supply and demand

There are also different methods of measuring liquidity. When it comes to the convenience of allowing investors to exchange cryptocurrencies and cash, in addition to bank transfers in mainstream currencies through major exchanges, we are also seeing more and more Bitcoin vending machines (Bitcoin vending machines) all over the world. ATMs, referred to as BTMs) provide trading services.

According to ARK Invest’s report, the liquidity spread of the Bitcoin spot market can be as low as 0.0001%, which is lower than the average bid-ask spread of approximately 0.035% in the US stock market. However, this ratio is largely due to Bitcoin’s low Minimum Tick Size, so observing the depth of its order book is more indicative. On mainstream exchanges, including Kraken, Bitfinex, and Coinbase, the slippage of a one million dollar order is less than 0.3%, while the slippage of less liquid exchanges can be as high as 7%. In order to reduce slippage, some investors will put assets under custody and choose to open positions on multiple exchanges.

Supply and demand

Unlike stocks, there is no corporate balance sheet for reference when assessing the value of Bitcoin. On the contrary, Bitcoin is more like other commodities, and its price is affected by basic supply and demand. In addition, it is also affected by other factors, such as the total liquidity, the distribution of long-term and short-term investors, the mining process, and other unquantifiable factors.

The current circulation of Bitcoin is approximately more than 18.5 million. However, according to Chainalysis’s estimation, about 20% of bitcoins have been lost and cannot be recovered, and more than 77% of the remaining liquidity is held by long-term investors, so the actual number of bitcoins available for trading is about 3.4 million. Based on the 6.25 bitcoin rewards per block, or the daily mining rate of 900 bitcoins, there will only be about 3.28 million new bitcoins in 2021.

As for when these new bitcoins will circulate in the market, it will depend on price trends, especially the cost of mining, including electricity bills, operating expenses, purchase and refurbishment of hardware. The location of the mine, the hardware used, the scale, and the electricity bill will also affect the cost difference of Bitcoin mining, and the actual impact of these factors on the Bitcoin price is still controversial.

Retail and traditional investors alike cannot help but notice the sustained resilience of the crypto markets

Individuals and traditional investors cannot change the enduring resilience of the crypto market, but can only observe from the sidelines

Since the launch of Bitcoin, its production cost has increased by one million times. At present, miners have to spend $1 billion a year, but this only accounts for less than 0.5% of Bitcoin’s total transaction volume. Some studies have pointed out that since 2010, the related costs of mining Bitcoin have not changed much, which means that the Bitcoin system is operating as expected. As the currency price increases, more and more miners join the competition for the halving bitcoin rewards, so mining computing power also needs to be increased successively, thereby pushing up the corresponding production costs.

Everyone has different opinions on this aspect. In July 2020, a Forbes article warned that there will be a greater price correction. Bitcoin rose to $10,000 after the halving, and the mining cost is about $5,000-$8,500, which is much lower than the cost expected by experts. The price of Bitcoin has not fallen sharply, but has doubled, reaching a record high of more than $20,000. The price of Bitcoin is full of variables and volatility. Forkast’s article believes that even individuals and traditional investors cannot change the enduring resilience of the crypto market, but can only observe from the sidelines.

The Bitcoin investment community generally refers to the Stock to Flow Model (S2F). The model was proposed by an institutional analyst in the Netherlands and published related articles using the Twitter account PlanB. The inventory ratio is calculated by dividing the total amount of the commodity’s existing stock or stock (Stock) by the total amount of the commodity’s annual output (Flow). He pointed out that commodities such as gold, silver and bitcoin have been used as stores of value in the past. The valuation calculation based on this model is very attractive. It expects Bitcoin to rise to one million US dollars by 2025. Of course, everyone should note that this is a controversial model.

Inventory ratio model January 1, 2013 – August 1, 2020

Source: Grayscale

As Bitcoin matures, many people are working hard to establish a reliable structure to estimate the price of Bitcoin. Some models have certain reference value, but they are not 100% accurate.

Due to the speculative nature of the Bitcoin market, many investors will extensively refer to prices predicted by technical analysis to determine their investment behavior.

In the long run, all calculation models and price predictions ultimately depend on mainstream acceptance and participation, the promotion of decentralized finance in an environment full of tension and variables, and the extent to which market behavior strengthens Bitcoin as a safe haven for funds.

Chapter 3: What is the future trend?

Focus

• Third-party custodial services, stricter supervision and centralization may harm the core value of Bitcoin
• Based on the speculative and volatile nature of Bitcoin, we expect Bitcoin will continue to be popular with the public
• The main target price of Bitcoin is predicted to be $36,000 and $55,000 in 2021

Risks and opportunities

Bitcoin is at the peak of its price, but there seems to be some resistance before it successfully develops into an asset class.

One of Bitcoin’s value propositions is to obtain true sovereignty, but there may be other considerations for the asset custody of institutional investors. In the past ten years, mismanagement of private keys has caused more than one million losses, but it is impossible to recover compensation through legal channels. Some jurisdictions, including the United States, require institutional investors to use third-party custodial services, thus promoting the rapid development of the custodial ecosystem.

A big part of bitcoin’s appeal lies in its specula- tive nature, marked by price movements dramatic enough to capture the interest of a fast-paced world

The most attractive thing about Bitcoin is its speculative nature, and its price volatility has successfully attracted the fast-moving world

Supervision brings another potential risk to BitCoin. As a decentralized network asset, one of the most important values ​​of Bitcoin is to promote the free flow of capital without border restrictions and achieve financial freedom. Regulators are continuing to explore and propose more restrictive measures to deprive bitcoin investors of their rights or drive the cryptocurrency market to operate underground. As regulators improve safety, market integrity, and operational standards, the market may continue to open to the mainstream market.

Although the participation of institutional investors has a positive impact on the market, we must note that institutional-level market infrastructure is closely related to third-party custody and compliance, which may be related to Bitcoin being a “public token” and not subject to government monitoring The core values ​​conflict with each other. Of course, the government will not sit idly by. As more funds are registered and managed, it will cause potential seizure risks, reducing the attractiveness of Bitcoin as a “currency belonging to the masses”, and its popularity will be greatly reduced.

The industries surrounding the digital asset economy are full of development potential, including token issuance and central bank digital currency. However, as mentioned earlier in this article, industrial development may not be directly related to the growth of Bitcoin. What is more certain is that Bitcoin, like the new generation that can quickly adapt to new digital technologies, will jointly promote the principles of privacy, openness and transparency, autonomy and sharing economy. For most “users”, one of the most attractive aspects of Bitcoin is its speculative nature, and its price fluctuations have successfully attracted the fast-moving world. Price volatility is not necessarily a by-product of immature markets. On the contrary, its volatility characteristics have successfully attracted individual and institutional investors, and unpredictable price trends have become the main driving force for its growth, especially through the derivatives market. Participate in Bitcoin investment.

Price forecast for 2021

Looking ahead, Bitcoin will face some risks and opportunities. As to whether it will affect the value of Bitcoin, it is up to investors to decide. Supply and demand factors will undoubtedly affect the price of Bitcoin, but we believe that there is no need to rely on this framework prematurely. You should make price predictions based on technical analysis.

For example, the inventory ratio model predicts that Bitcoin will rise to $100,000 in 2021. However, from the analysis of the global economy and charts, although the price of Bitcoin is difficult to predict, it seems a bit unrealistic to talk about rising to $100,000.

Recently, a new variant of COVID-19 has been discovered in the UK, but the traditional market still maintains an upward trend. It is not clear how Bitcoin will respond to this news, at least in the short term, there is still no clear direction.

NDAQ/USD

Source: Tradingview

If there is a shock in the traditional market in 2021, it may trigger a crisis like the one in March this year. If the market suddenly goes down, it will sweep long orders and trigger liquidation, ending the current bull market trend.

Since January 2020, Bitcoin has risen by 220%. If the inventory ratio model is correct, Bitcoin will rise sharply to $100,000. The increase in the past two years will reach an astonishing 1270%, and the current price will increase by about 332%. .

BTC/USD: If Bitcoin rises to $100,000 USD

Even so, Bitcoin’s rush to $55,000 is still just around the corner. First, $55,000 will reach the 2.618 Fibonacci extension level. From the support and resistance range of $200 to $20,000, it can be seen that the price maintains an upward trend; from $20,000 to $3,000, it shows a downward trend, and then reaches the level of $55,000 to 2.618.

BTC/USD

Source: Tradingview

If Bitcoin is to reach $55,000, it must hit the 1.0 level in January next year, maintain the current parabolic state and maintain the current momentum, otherwise it is less likely to rise to $55,000. If it hits the 1.0 level in January next year, it will approach $36,000.

If it is not close to the 1.0 level before February, it will increase the crisis of price correction, causing the price of the currency to fall all the way to the resistance level of $17,000, balancing the continued bull market trend, and also representing that the chance of Bitcoin reaching $55,000 is further reduced. Based on the theory of supply and demand, Bitcoin may rise to $36,000 by the end of the year.

Bitcoin price prediction for 2021

For example, Bitcoin maintains a parabolic momentum: $55,000 (it may happen in the first quarter of 2021)

For example, Bitcoin pulls back and loses parabolic momentum at $24,000: $36,000 (it may happen in the last quarter of 2021)

For example, the traditional market collapses and Bitcoin follows a downward trend: $7,000-$6,000 (However, considering Bitcoin’s performance this year, the target price has a higher chance of reaching $36,000)

to sum up

In its first Decade of Emergence, the question that was often asked about bitcoin was: is it real or not? Now, the question is buy or sell?

In the development period of the first ten years, the most common question everyone asked was: Is it true? Now everyone will ask: buy or sell?

This article clearly states that Bitcoin is an asset with investment value. The market has seen a clear turn, and institutional investors have successively included Bitcoin in their investment portfolios.

Bitcoin is still a speculative asset. Although it shares characteristics with technology stocks, we believe it is still exploring its positioning in the global market.

Price volatility alone is enough to attract institutional and individual investors, although it will make it more difficult for Bitcoin to perform its function as a currency. In the long run, or when there is an economic crisis, the public will continue to pursue Bitcoin.

As more and more worries about autonomy, privacy, and financial intermediation emerge around the world, society will pay more attention to related issues. As investors, you need to keep an eye on them and pay attention to whether Bitcoin will be brought into the mainstream. discuss.我们将在稍后详细研究有关主题。

现时有不少实用的模型及准则评估比特币的整体发展，并预测它的牛市走势。但由于比特币的本质较为复杂，我们在现阶段会较着重技术分析的价格预测。而其他的预测模型则为投资者展现比特币长远的发展视野，提出比特币为一种蕴含内在价值及将会不断升值的商品。

从AAX 的角度，我们认为教育是比特币发展重要的一环。进入采纳时期，从监管机构及传统金融参与者有更全面的辩论、网上的论述、主流媒体的报道及大量的资讯可见，比特币已变成主流的讨论对象，大众的接受程度快速增长。大家对于比特币都有不同的看法，有些人认为比特币可以对抗通胀，有些觉得它可以保障财产，而部分人认为购买比特币无疑等同购买彩票，以防万一币价的疯狂预测真的有一天能成真。

在前十年的发展时期，大家最常问的是：它是真的吗？现在大家会问：买入还是卖出？?

©2021，AAX Limited。以上资讯仅供参考，如有变更，恕不另行通知。此文章不构成明示或暗示AAX Exchange 所提供的服务或产品。所有关于公司、证券或金融产品的描述均为AAX 的独立看法和观点，并不代表AAX 对任何公司或证券的认可，也不代表AAX 提供任何买卖或持有任何证券的建议。过去的价格表现并不代表未来的表现。